UPDATE 2-UAE telco du Q2 profit soars on new customers

* Posts record quarterly profit, rising 231.5 pct

* Adds 155,900 subscribers in Q2

* Shares jump more than 4 pct in Dubai (Adds details, CEO comment, analyst, shares)

By John Irish

DUBAI, July 26 (Reuters) - Telecoms firm du DU.DU posted a record quarterly profit, slightly ahead of analysts forecasts, on Sunday as the United Arab Emirates' second-largest mobile operator added subscribers despite an economic downturn.

Du, which is almost 40 percent owned by the federal government, said net income surged 231.5 pct in the second-quarter to 57.65 million dirhams ($15.7 million) from a loss of 43.84 million in the corresponding period in 2008.

"We are really seeing the momentum of growth since March and steadily in the second quarter," Chief Executive Osman Sultan said in a post-earnings conference call.

Quarter-to-quarter net income rose 22 percent as it gained 155,900 mobile telephone customers in the three months to June. Its total active subscribers now stands at 2.9 million.

Thousands of expatriates have lost their jobs in the Gulf trade and tourism hub of Dubai since the global financial crisis took hold. The crisis triggered a real estate crash late last year that brought a six-year economic boom story to bust in a matter of months.

Sultan said the three-year old firm expected the next two quarters to be challenging due to the global economic downturn and would be cautious.

"We are watching carefully ... it's still early to say let's not be on guard," Sultan said.

Du's shares, up almost 24 percent this year, jumped as much as 4 percent in early trade on the Dubai Financial Market.

Telecom analyst Sleiman Aboulhosn at Abu Dhabi-based Prime Emirates said du's quarterly profit was ahead of his estimates as revenue per available user (ARPU) picked up 5 percent in the second quarter from a 14 percent drop in the first quarter and the firm's competitor Emirates Telecommunications Corp ETEL.AD lost 80,000 subscribers.

"People are starting to realise the value du is offering ... in these times people want to cut costs and focus on expenses," he said referring to cheaper international and local calls offered by the Dubai-based operator.

FOCUS ON BROADBAND

Du's results would have exceeded expectations had it not provisioned for a 50-percent royalty fee to the government, for which a decision by the UAE regulator is expected later this year. Including royalty fee, du's net income for the period was 115.3 million dirhams.

The company's chairman Ahmed bin Byat, who is also chief executive of Dubai Holding -- a firm owned by the ruler of Dubai which owns 19.5 percent stake in du -- said in a statement that du was aiming to increase its share of the market to 35 percent in 2010 from 30 percent.

The Abu Dhabi government's investment vehicle, Mubadala, owns 19.7 percent of du.

Total revenue for the second quarter rose 44 percent to 1.31 billion dirhams from the year earlier, du said, while quarter-on-quarter revenues rose 12 percent.

A Reuters survey earlier this month predicted net profit to rise, on average, to be about 56.4 million dirhams. [ID:nLL648965]

The firm, which posted a first-quarter profit of 47 million dirhams, said its capital expenditure (capex) programme is expected to exceed 2 billion dirhams this year, with 404.5 million dirhams of that booked in the second quarter.

Sultan said it would focus investment on the mobile broadband market and would announce details of capital expenditure for 2010 later in the year.

"I do expect capex on the network within a year to 18 months to be at peak and then will ease specifically as a percentage of revenue," he said declining to give further details.

(Reporting by John Irish; editing by Jeremy Laurence)