01/11/2017 05:43 AST
Emirates Integrated Telecommunications Company PJSC (EITC), parent company of du, reported a four per cent year-on-year increase in third-quarter net profit, fuelled by one-off gains and good performance of the postpaid market.
"There have been some one-off gains in our favour in the way we pay for ICT Fund. ICT Fund was one per cent of total revenues, but TRA (Telecommunications Regulatory Authority) has agreed that it will be implemented only on regulated revenues. There have been some reverse adjustments of provisions from previous quarters and that boosted our profits," said Osman Sultan, Chief Executive Officer of EITC.
The Dubai-based telecom operator reported a net profit of Dh476 million compared to Dh457 million during the same period a year earlier.
Revenue stood stable at Dh3.13 billion, compared to Dh3.14 billion a year ago, a change of 0.2 per cent.
"The third quarter of the year marked a milestone for EITC with the official launch of the Virgin Mobile brand, while also reinventing the traditional telecom business to a more efficient and lower cost base operating model," Sultan said, but did not give a breakdown of revenues for Virgin Mobile.
The operator's mobile revenue increased by 3.3 per cent to Dh2.3 billion, but fixed revenues increased by 7.5 per cent to Dh586 million.
Sukhdev Singh, vice-president at market research and analysis services provider Kantar AMRB, told Gulf News that fixed line growth is linked to new property developments in the UAE. As a run up towards 2020, construction activities have picked up and Dubai is witnessing a significant rise in the delivery of new properties.
Since most of these developments are serviced by du, he said that du stands to gain. It helps fixed line as well as fixed internet services revenues. The operator has reported a substantial increase in post-paid connections in the third quarter even though postpaid share is just about 15 per cent in the UAE as a proportion of all mobile users, it is a significant gain.
This will impact the bottom line over time as AMPU (average minutes per user) in case of postpaid is more than double of prepaid consumers in the UAE, he said.
Singh also said that the addition of Virgin Mobile has helped du with increasing the number of subscribers in the third quarter which otherwise was a muted quarter for telecom companies.
"One can notice huge investment in the brand, and a clear strategy of targeting youth as a consumer segment. Even Etisalat has ventured with a new brand in Swyp to directly compete with Virgin in that segment of the market," he said.
Even though du's mobile subscribers increased just by mere 0.7 per cent to 9.12 million subscribers, the operator's fixed-line subscribers increased by 5.3 per cent to 724 million.
"We continue to see pressure on mobile rates, with mobile revenue decreasing 3.3 per cent to Dh2.30 billion. We remain on track with our strategy of attracting higher quality customers and are pleased to report that the post-paid segment increased 14 per cent in the third quarter compared to the same period last year," Sultan said, adding that the pressure on the prepaid market is due to the use of internet voice applications.
"Our increased reliance on the IoT has fundamentally changed the way people interact and we, therefore, must change the way we do business. To this end, we recently announced a significant change in our organisational structure with the creation of three new business divisions to support EITC's growth.
"The newly-formed ICT Solutions division will provide UAE government entities and enterprises with advanced end-to-end ICT infrastructure and services; the Digital Lifestyle and Innovation division, which will focus on the development of innovative products and services for UAE consumers, including smart home services; and the Infrastructure division, which will consolidate a
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