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Thu 31 Oct 2013 10:59 AM

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UAE Du Q3 profit up 45% on lower tax, higher revenue

Telco made made a net profit of $129.13m in the three months to September 30

UAE Du Q3 profit up 45% on lower tax, higher revenue
UAE TELECOM: The firms revenues in the past year increased 30 percent to AED1.703bn. (ITP Images)

Du, the UAE's second biggest telecommunications operator, reported a 45 percent increase in third-quarter profit on Thursday, roughly in line with analysts' estimates as revenue rose slightly and it paid a lower taxes.

The firm, which ended rival Etisalat's domestic monopoly in 2007, made a net profit of AED474.3m ($129.13m) in the three months to September 30, up from AED326.9m in the year-earlier period.

Analysts polled by Reuters on average had forecast du would make a quarterly profit of AED478.1m.

In December 2012, the UAE announced changes to the royalties, or tax, it levies on the telecom sector, introducing a more complicated structure that would reduce the burden on du and Etisalat, which are both majority-owned by state-linked institutions.

Du paid a royalty of AED293.2m, having made a pre-tax profit of AED767.6m, giving an effective tax rate of 38 percent. In the year earlier period, it provisioned to pay 50 percent of its profit in royalties.

Quarterly mobile revenue rose 9.7 percent year-on-year to AED2.05bn. Of this, AED616m came from data, with data income up by about a third from a year earlier.

Du increased its mobile customer base by 15.7 percent from a year ago to 6.9 million subscribers as of September 30, giving it a market share of 46.4 percent.

Of these mobile customers, 9.1 percent were on monthly, or post-paid, contracts. These subscribers typically spend more on telecom services and are less likely to switch provider.

"Growth during the quarter was driven by progress made in the data segment and a continuing strategy of attracting high-value customers," Osman Sultan, du chief executive, said in the statement.

Despite this, du's average revenue per user (ARPU) - a key industry metric - fell to AED97 in third quarter, down from AED99 in the second quarter of 2013.

Du's margin on its earnings before interest, tax, depreciation and amortisation (EBITDA) - another important industry indicator - was 40.2 percent for the third quarter, up from 39.1 percent in the year-earlier period.

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