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Malek Al Malek

UAE telco du's Q2 profit up 26pc; revenue hits $854m

DUBAI, July 21, 2022

Emirates Integrated Telecommunications Company (du), UAE’s second licensed telecommunications operator, has posted a net profit jump of 26.2% to AED303 million ($82.5 million) in the second quarter of 2022.
 
Revenues increased by 9.9% to AED3.14 billion on sustained demand for broadband and mobile services. 
 
EBITDA improved by 12.1% to AED1.27 billion thanks to a sharp increase in service revenues and gross margin expansion. Operating Free Cash Flow (EBITDA – Capex) grew 47.7% to AED709 million thanks to higher EBITDA and Capex spend that is beginning to normalise. 
 
On the basis of these results, the Board of Directors approved an interim cash dividend of AED0.11 per share representing a 10% increase over the previous year’s interim dividend.
 
Operating highlights 
 
du's mobile customer base grew 13.0% to 7.4 million subscribers highlighting the sustained performance of its postpaid segment with net-additions of 24,000, a fourth consecutive quarter of growth, to reach 1.4 million subscribers. EITC ended the quarter with 6.1 million prepaid customers. 
 
The prepaid visitor customer base tapered following the conclusion of Expo 2020 and the start of the low tourist season. Excluding visitor SIMs, the firm’s prepaid customer base remained stable when compared to the previous quarter. 
 
According to du, consumer broadband customer base increased 69.5% to 473,000. It attracted 35,000 new customers (Q2’21: 31,000). This strong performance is due to a combination of connecting new premises to its fibre network and its attractive commercial offering. 
 
Financial highlights 
Revenues grew 9.9% to AED3,137 million. Mobile service revenues continued their recovery: revenues increased 8.6% to AED1,406 million while handset sales generated revenues of AED196 million.
 
Fixed services revenues jumped 24.4% to AED855 million as its consumer and enterprise segments continue to perform. In aggregate, service revenues increased 14.1% to AED2,261 million. 
 
EBITDA increased by 12.1% year-over-year to AED1,267 million. This improvement was mainly driven by higher service revenues and improving gross margin. Given mobile and fixed services’ higher profitability, EBITDA margins expanded by 80bp to 40.4%. 
 
Net profit jumped 26.2% to AED303 million. The impact of higher EBITDA was partially offset by greater depreciation charges and Federal royalty charges. 
 
Capex spend moderated to AED558 million on a capital intensity of 17.8%. This reflects the usual seasonality as most of the Capex spend is skewed towards the second half of the year. More importantly, EITC’s capex profile is continuing to normalise following two consecutive years of high capital intensity. 
 
Operating free cash flow (EBITDA – Capex) increased by 47.7% to AED709 million. This is the combined result of an improving EBITDA and lower capex.
 
Recovery trend
Chairman Malek Al Malek said: “du has delivered an excellent set of results. The recovery trend seen towards the end of last year, is morphing into a growth trajectory that is driving revenues back to pre-Covid levels and an improvement in profitability. We are maintaining a dynamic and proactive commercial approach: we will continue launching new products and services for the benefit of our customers."
 
“Our transformation projects, a key enabler of these commercial initiatives, are progressing according to plan. With these elements in mind and on the basis of our solid results, I am pleased to announce that the Board of Directors approved the distribution of an interim cash dividend.”
 
Fahad Al Hassawi, CEO said: “We have delivered three consecutive quarters of improvements and growth. Crucially, our service revenues have been and will continue to be a significant driver of profitability. Q2’22 service revenues have reached a three-year high. Our commercial and investment efforts continue to bear fruits. We had a fourth consecutive quarter of net-additions on the high-value postpaid segment. 
 
“Our customer acquisition on the consumer broadband services remains robust. We are also actively managing the efficiency of our business to drive profitability. Cash generation will sustainably improve as our Capex programme continues to normalise.
 
“As the UAE economy and population grow, I am confident we will continue to improve our positioning through the various initiatives we are launching."-TradeArabia News Service



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