Du 2019 profit slips as mobile prepaid revenue slumps

Dubai: Emirates Integrated Telecommunications Company (du) on Tuesday reported a 1.3 per cent slip in full-year net profit, hurt by a decline in mobile prepaid and handset sales, along with higher investments to roll-out 5G faster.

Du cited the declines to the pressure on mobile prepaid revenues, which was adversely impacted by pricing, competition and the negative impact on the base of the SIM registration disconnections.

Mobile revenues declined 8 per cent to Dh6.54 billion, the firm said, which forced Du to report a 6.2 per cent decline in 2019 revenue at Dh12.59 billion.

However, the telecom giant called the result ‘positive’, as like-for-like profits for the year jumped 9 per cent, with profits during the last quarter of the year surging 30 per cent. Revenue declined 6 per cent in the fourth-quarter.

Positive results amid challenges

The firm cited the jump in comparable annual profits on “better product mix that led to an improvement in the gross margin as well as an improved efficiency in the management of the business”.

On the basis of these results, the board recommended to the shareholders, for the year 2019, a dividend distribution of 34 fils per share out of which 13 fils per share have been already paid in August 2019 as an interim dividend, the firm added.

“I am pleased with the strong results that EITC was able to achieve despite the challenging environment that the telecom market went through in 2019,” said chairman Mohamed Al Hussaini.

The firm was able to” absorb fully the pressure on its revenues through increasing focus on promising growing revenue streams, better mix of its base and increased efficiency,” Al Hussaini added.

More 5G investments

Capital expenditure increased by 46.8 per cent to Dh1.5 billion, which makes up 12 per cent of the revenues, which Du said reflects continuation of the investment in 5G network rollout, fibre network expansion and IT “modernization and transformation” initiatives.

The firm said its subscriber base continued to grow in the fixed-revenue segment reaching 219 thousand subscribers at the end of 2019, reflecting a 7.1 per cent growth when compared to last year. This supported an annual ARPU (annual revenue per user) growth of 4.3 per cent.

“The increase in subscribers stabilized its mobile base as the impact of SIM registration started in Q4 to fade away”, the firm said.