UAE telecoms provider du plans to expand its fixed-line operations across the country, putting more pressure on the Gulf's largest telecoms operator Etisalat.

Dubai-based du broke Etisalat's monopoly in 2007 and has been rapidly gaining ground on its larger rival, prompting Etisalat to seek acquisitions to expand.

Etislat this week said it was still interested in Zain after it missed a due diligence deadline in its $12 billion bid to buy a controlling stake in the Kuwaiti company.

'We will expand our fixed business nationwide,' Du chief executive Osman Sultan told reporters on Thursday after du said fourth-quarter profit more than doubled, driven by a jump in mobile and fixed-line subscribers.

Sultan said capital expenditure would rise to around Dh1.7 billion ($463 million) in 2011, from 1.3 billion last year.

The company - partly owned by the ruler of Dubai's investment company Dubai Holding and Abu Dhabi-owned investment vehicle Mubadala - also plans to boost its market share of mobile customers.

'In 2011, we will increase our market share in mobile,' Sultan told reporters. 'Our results show one of the highest growth rates in ... one of the most penetrated markets in the world.

'We expect growth (in data revenues) to be significant.'

Sultan said du had no plans to expand outside the United Arab Emirates.

Du added 252,000 active mobile customers in the fourth quarter, giving it a nearly 40 per cent market share in the UAE, Sultan said. Its fixed-line customer base climbed to 561,000 from 405,900 a year earlier.

The operator's shares ended 1.7 per cent lower, tracking declines on Gulf markets as fear of growing political unrest weighs on region investor sentiment.

Profits up, buoyed by subscriber growth

 Profit before royalty jumped to Dh431 million for the quarter ended Dec. 30, from Dh209 million in the prior-year period. Revenue jumped 34 per cent to Dh2.05 billion.

Profit after royalty was Dh912 million, including the effect of the UAE federal government's decision last month to slash the annual royalty fee du pays to 15 per cent of net profit for 2010. Du was able to add back provisions it had made to pay royalties at a higher rate.

The 15 per cent royalty rate is far below the 50 per cent analysts had expected it to pay and which Etisalat is levied. – Reuters