Du profit jumps 15% on increased postpaid share and efficiencies

UAE operator group Du managed to post a healthy jump in profits in Q4 2017 thanks to increasing its number of high-value subscribers.

Net profit after royalty (which seems to mean payments to the state in some form or other) jumped 14.9% year-on-year on revenue that remained pretty flat, implying a fairly significant margin improvement. There don’t seem to have been any significant one-offs so the increased profit seems to just be down to doing things better.

“The successes achieved last year are an indication that the strategic transformation our company has undertaken is enabling us to adapt to the evolving industry and accommodate the changes in customer and business behaviour,” said Ahmad Bin Byat, Chairman of EITC (the proper name for Du). “Our strategic goals have the UAE at their core, contributing to the nation’s sustainable growth through digital transformation. During 2017 we made good progress in this regard, having developed the Dubai Smart City platform, now fully operational, with core infrastructure in place and delivering.”

Commenting on the results, Osman Sultan, EITC’s Chief Executive Officer, said:

“Looking at our financial performance, I am pleased to report a record Revenue of AED 13 billion for 2017, representing a 2.2% increase over 2016,” said Osman Sultan, EITC’s CEO. “This comes as we continue to attract higher quality customers resulting in a 12.3% growth in our post-paid segment during the year, stimulated by our increased focus on that segment. Revenue growth was also supported by a solid performance in our fixed line business.

“Net Profit after Royalty had an excellent growth quarter on quarter, up 14.9% in Q4 2017 to AED 425 million, which helped maintain a stable annual Net Profit after Royalty of AED 1.71 billion, recovering from a weak quarter in Q1 2017. Growth was supported by the increase in revenue, improvement in gross margin and the impact of our cost optimisation programme. EBITDA margin is solid at 40% for the year.”

The Middle East has been one of the parts of the world where telecoms investment has seemed to remain buoyant as it tails off in North America and Europe. Some of this could be as a result of sovereign wealth funds moving away from areas that have failed to live up to expectations, such as construction, but the region also seems to see 5G as a broader economic strategic opportunity, so it wouldn’t be surprising to see this investment continue and for the region to be a global test-bed, to some extent.