* Q3 profit 326.9 mln dirhams vs 244.3 mln dirhams a yr ago
* Q3 revenue 2.52 bln dirhams vs 2.23 bln dirhams a yr ago
* Results narrowly miss analysts' forecasts
(Recasts, adds CEO quotes, details)
By Matt Smith
DUBAI, Oct 22 Du, the United Arab
Emirates' No.2 telecom operator, aims to capitalise on wealthy
customers' appetite for data via smartphones to offset margin
pressures in its mobile phone business that held back third
quarter profit growth.
The firm on Monday posted a 34 percent rise in profits for
the three months to September 30, but this fell short of
Du, which ended rival Etisalat's domestic monopoly
in 2007, made a third quarter net profit of 326.9 million
dirhams ($89.00 million), compared with 244.3 million dirhams in
the year-earlier period.
Analysts polled by Reuters on average forecast du would make
a quarterly profit of 333.3 million dirhams.
The UAE's telecom sector as a whole is experiencing a
slowing in revenue growth due to the country's largely foreign
workforce increasing use of internet-based services, hurting
operators' lucrative international call and text businesses.
"We continue to witness pressure on voice, while mobile data
revenue increased significantly," Chief Executive Osman Sultan
told reporters on a conference call.
Third-quarter mobile data revenue nearly doubled to 323
million dirhams from a year ago. This was 17 percent of total
mobile revenue, which rose 13 percent to 1.94 billion.
"I wish to see it (mobile data) in the 25 percent range at
the end of next year," Sultan said.
Data's growing contribution to mobile revenue is part of
du's push to focus more on increasing earnings per-customer
rather than on expanding mobile market share.
To achieve this, du will try to up the proportion of mobile
customers on post-paid monthly contracts to more than 10 percent
by 2013-end, from 8 percent as of Sept. 30. These customers are
typically wealthier and spend more on telecom services.
The operator had 5.96 million mobile subscribers on Sept.
30, adding 227,800 in the quarter.
This gave it a 47.2 percent share of the UAE's mobile
subscribers, up from 46.5 percent in the second quarter.
Quarterly revenue was 2.52 billion dirhams. This compares
with 2.23 billion dirhams a year ago.
Du also aims to increase revenue from business customers and
home services, but its failure to agree a network sharing deal
with Etisalat to allow full competition for fixed line services
and the lack of mobile number portability (MNP) could hinder
Both operators offer fixed-line voice, broadband and
television services but not in the same districts and an
agreement to share their respective infrastructure was due to be
concluded last year.
"It's a difficult discussion," said Sultan. "This is taking
more time than expected. It's not happening for the moment."
MNP allows customers to switch operator and retain their old
phone number, which is seen as key for business customers. In
2007, the UAE regulator said it would introduce MNP the
following year, but has yet to do so.
"The introduction of mobile number portability will help,"
Du's net profit margin was 25.9 percent in the third
quarter, up from 21.9 percent a year ago.
The firm's shares ended 1.3 percent lower after the results
were announced. The stock is up nearly 30 percent so far this
(Reporting by Matt Smith, Editing by Dinesh Nair and Jane