Du returns to growth in 2009

02 March 2010

Telecom operator’s net profits increase by $72m

The UAE’s second telecom service provider, Emirates Integrated Telecommunications (Du), has reported a net profit of AED264m ($72m) in 2009 compared to AED4.124m in 2008.

The company’s fourth-quarter net profit grew to AED105m on a surge in mobile phone users, a 33.6 per cent year-on-year increase.

The company gained 1.011 million customers, bringing its total subscriber base to 3.477 million at the end of 2009, a 41 per cent increase over the corresponding period last year. Fixed line subscribers grew by 125,000 to 405,000, recording a growth of 45 per cent.

“These results are strong and in line with our expectations,” says Irfan Ellam, vice-president of equity research at Al-Mal Capital, a UAE-based investment bank.   

“We think the company’s stock is undervalued and that the share price will outperform the market as a whole.”  

The bank maintains its outperform rating on du, with a price target of AED3.99, giving 40 per cent upside to its target price.

However, analysts believe there is limited room for substantial mobile subscriber growth in 2010, with Al-Mal Capital projecting 5.7 per cent growth in net mobile adds – the difference between the number of people joining and leaving a network – as a whole for the UAE in 2010.

“We believe future growth will come from mobile data and from fixed line growth once the local loop is unbundled which is expected in the second half of 2010,” says Ellam.

Du is currently in talks with Etisalat, the UAE’s first telecom provider, to formalise an infrastructure sharing agreement.

Du plans to invest up to AED2.2bn on boosting its mobile, broadband and fixed network this year in the hope of growing its market share beyond 30 per cent.

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