Telecom company du's Q1 net profit slips

Emirates Integrated Telecommunications Company, also known as du, reported a 27 per cent drop in its first-quarter net profit this year.

The company declared a net profit of Dh257 million ($69.9m) during the first quarter, compared with Dh355m in the same period last year, du said in a statement on Tuesday to the Dubai Financial Market, where its shares trade.

However, net profit for the January-March period more than quadrupled against the fourth quarter of 2020, on the back of an improving economy, the company said.

The UAE's second-biggest telecoms operator's revenue slid almost 3.6 per cent annually to Dh2.8 billion. On a quarterly basis, it surged 5.2 per cent.

“We continued seeing additional signs of gradual recovery in our general macro-environment,” Fahad Al Hassawi, acting chief executive of du, said.

“Mobility is increasing with the hospitality sector opening up, international tourism improving and people adapting their lives to [the] Covid-19 situation. Telecommunication needs remain a key component of everyone’s life,” Mr Al Hassawi said.

Despite tough market conditions, du invested in core network improvements, expanded its 5G network roll out and improved mobile coverage and capacity, it said.

Its first quarter capital expenditure increased more than 83 per cent annually to Dh568m.

Founded in 2005 as the UAE’s second licensed telecommunications provider, du is 50.12 per cent owned by Emirates Investment Authority, 10.06 per cent by Mubadala Investment Company and 19.7 per cent by Emirates International Telecommunications, with the remainder of shares in public hands.

The company’s mobile revenue, which was down 12.7 per cent annually, stabilised at Dh1.3bn on quarterly basis.

Fixed-line revenues, which grew more than 2.8 per cent quarter-on-quarter and over 3.4 per cent yearly, reached an all-time high of Dh663m. It ended the quarter with 248,000 broadband customers, du said.

“We continued investing in our network … we added 13,000 broadband customers during the quarter, which is nearly as much as the annual net-adds in previous year,” Mr Al Hassawi said.

“Strong demand for iPhone 12 and other 5G-enabled handsets are a precursor for demand for 5G services,” he added.

The company’s earnings before interest, taxes, depreciation and amortisation was Dh1.1bn in the first three months of the year, up 8.7 per cent compared with the previous quarter.

Operating free cash flow in the first quarter was Dh552m, representing 12.5 per cent quarterly growth but an annual decline of 42.3 per cent.

“Our customers are evolving, so are we. We will not thrive by simply meeting their expectations … we initiated a transformation late last year and deliberately stepped up our capital allocation,” Mr Al Hassawi said.

In January, du also increased its foreign ownership cap from 20 per cent to 49 per cent to attract more external investors.