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Publicis Media Middle East


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Du reports 20 per cent drop in Q4 net profit

February 14, 2017 5:51 pm


Du, the United Arab Emirates’ second biggest telecommunications operator, reported a 20 percent fall in fourth-quarter net profit on Tuesday, according to Reuters calculations.

The firm had reported declining profits in the preceding eight quarters, according to Reuters data, with chief executive Osman Sultan saying in July last year that the firm needed to regain momentum in the prepaid mobile market if it was to counteract the impact of higher government taxes.

Du, which ended rival Etisalat’s domestic monopoly in 2007, made a net profit of 369.8 million dirhams ($100.8 million) in the three months to Dec. 31, down from 462.4 million dirhams in the year-earlier period, Reuters calculated from financial statements in the absence of a quarterly breakdown.

SICO Bahrain had forecast du would make a quarterly net profit of 447.5 million dirhams, while EFG Hermes had forecast 463.9 million dirhams.

For the full year of 2016, du said net profit was 1.75 billion dirhams, down from 1.94 billion dirhams in the previous year.

Restructuring

Two weeks ago, CEO of Du said it had shed “tens” of jobs as part of months of restructuring.

“Streamlining an organisation means that you find pockets of efficiency and some positions have been made redundant … I triggered this process in April/May last year,” he said.

The company’s financial performance has been under pressure since late 2014 as the pace of growth in the mobile market is unable to keep up with the increasing royalty rates paid to the government.

Virgin Mobile in UAE

In late January, Emirates Integrated Telecommunications Co (EITC), the holding company of du, announced that it has bought the license from British entrepreneur Richard Branson’s privately owned Virgin Group to operate Virgin Mobile-branded services in the country. Experts believe the move was aimed at addressing the issue of declining profits caused by intensifying competition and growing customer expectations.

Sultan, also CEO of EITC, said the license term is for more than five years and it grants the group full rights to ownership, management and operation of the brand in the UAE.

But he insisted it is not a new operator but a brand and will use EITC’s network and infrastructure in the same way that du does.

(With inputs from Reuters)

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