Du Q4 profit jumps on tax write back
Dubai, February 19, 2013
Telecom operator du's quarterly profit more than doubled as it wrote back tax provisions and saw an increase in its subscriber base, the United Arab Emirates' No. 2 telco said on Tuesday.
The firm, which ended rival Etisalat's domestic monopoly in 2007, made a fourth-quarter net profit of 994 million dirhams ($270.62 million) in the three months to December 31, up from 440 million dirhams in the year-earlier period.
Analysts had forecast average profit of 809.7 million dirhams, in a Reuters poll. Fourth-quarter revenue was 2.74 billion dirhams. This compares to 2.4 billion dirhams a year ago.
UAE telecom operators are taxed via royalties under license agreements with the federal government. The latter announced a new formula in December that includes a levy on revenues as well as profits.
Du had provisioned to pay 50 percent of its profit in royalty fees through the year, the same rate as the longer-established Etisalat.
But the new formula means it pays less tax as a percentage of profit than 2011, enabling it to write back some of the provisions it set aside in the first nine months of 2012.
Du paid 844 million dirhams in royalty fees for 2012, while pre-royalty net profit was 2.82 billion dirhams, which is equivalent to a tax rate of about 30 percent.
This compares with 2011's royalty of 715 million dirhams and pre-royalty net profit of 1.81 billion dirhams, which equates to a tax rate of 39.5 percent.
Du has proposed a cash dividend of 30 fils per share.
The operator's share of the UAE mobile subscribers increased slightly to 48.7 percent, while average revenue per user - a key industry metric - rose to 117 dirhams in the quarter from 110 dirhams in the third quarter.
The company has sought to sign up more mobile customers to monthly, or post-paid, contracts, with these customers typically spending more and being less likely to switch provider. Post-paid subscribers accounted for 23.5 percent of du's fourth-quarter mobile revenue of 2.18 billion dirhams, and 7.9 percent of mobile subscribers.
Since December, du has secured a $500-million, five-year club debt facility to fund its medium-term capital expenditure, a $100-million loan from Singapore's DBS Bank and another $100 million financing deal with Standard Chartered . The money will be used largely for capital expenditure, du said at the time. - Reuters