DUBAI - United Arab Emirates telecoms firm du, which posted a record quarterly profit on Sunday, plans to invest as much as 2.5 billion dirhams ($680.8 million) in 2010 as it looks to boost its services nationwide.The operator, which broke Emirates Telecommunications Corp's monopoly in 2007, more than doubled profit in the third quarter, driven by a 51-percent rise in active subscribers in the world's third-largest oil exporter.
"Those are very good number if we consider the seasonality of the third quarter which is summer, Ramadan and usually a slower time in the activity in the country," Chief Executive Osman Sultan said in a post-earnings conference call.
Thousands of expatriates have lost their jobs in the Gulf trade and tourism hub of Dubai since the global financial crisis took hold, hitting earnings across sectors.
Still, quarter-to-quarter net profit rose 36 percent as the operator gained 233,200 mobile telephone customers in the period. It now has 3.139 million active subscribers.
Du shares fell almost 5 percent in Dubai in line with a broad retreat across the Middle East as negative sentiment spreads over the state of the global economy.
Telecom analyst Sleiman Aboulhosn at Abu Dhabi-based Prime Emirates said du's quarterly profit was ahead of his estimates as subscriber numbers exceeded expectations.
"We saw stronger subscriber numbers and saw that with Etisalat too ... it's quite impressive," he said. Etisalat posted a 5 percent rise in third-quarter net profit in October.
The results were in line with analysts polled in a Reuters survey in October which forecast an average 177.4 percent rise in the quarter.
Osman said it was a "major imperative" for the company to provide triple-play and broadband services beyond a limited area in Dubai and was pushing for faster infrastructure sharing with Etisalat.
"Nationwide is a major priority. In 2010, I see du expanding and starting to offer (services) beyond its current territory ... I'm really hoping to see it (infrastructure sharing) in first half of 2010, but there are technical issues."
The company, which will invest about between 2 billion to 2.5 billion dirhams on its infrastructure this year, would invest a similar amount next year, Osman said, adding it was looking at a variety of financing options.
ROYALTY DECISIONDu's results took into consideration provisions 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 profit for the period was 157.1 million dirhams, while excluding royalty it rose 150 percent to 78.55 million dirhams from the year-earlier period.
"We are still waiting for a decision," Osman said. "We hope to have a decision before the end of the year (but) are provisioning a very conservative 50 percent."
Du, owned partly by the ruler of Dubai's holding company Dubai Holding and Abu Dhabi investment vehicle Mubadala Development Co, is well placed to expand its fixed line subscriber base and may increase its mobile market share to 30 percent by the end of this year, Abu Dhabi Commercial Bank said in a note to clients in September.
Raising its price target, it expected mobile subscriber growth in the region of 3.6 percent in 2010 compared with 3.2 percent in 2009 with greater demand for du's bundled services, including internet protocol television services, known as IPTV, and broadband.
ADCB raised its target on the stock to 3.09 dirhams from 2.85 dirhams. Du's shares closed 4.9 percent down to 3.88 dirhams on the Dubai Financial Market.
Du's revenues for the period rose 25 percent to 1.33 billion dirhams and earnings before interest tax, depreciation and amortization almost tripled to 297.3 million dirhams,