Du weighs first ventures abroad

Du will not try to build its own mobile networks outside the UAE. Pawan Singh / The National

The telecommunications operator du is studying the launch of operations outside the UAE as it looks to sustain its profits growth, having added 320,600 mobile subscribers in the first quarter of this year.

The company is gaining ground on its rival Etisalat on its home turf but, unlike the bigger operator, it has not yet ventured beyond the UAE.

Osman Sultan, the chief executive of du, said the company was now studying a foray into mobile markets such as Saudi Arabia.

Such a move would be part of a bid to sustain du's growth, after the company yesterday reported a 61.8 per cent rise in first-quarter profits, Mr Sultan said.

Du will not try to build its own mobile networks outside the UAE. Instead, the company is studying the possibility of entering foreign markets as a mobile virtual network operator (MVNO), Mr Sultan said.

Such operators do not build or own telecoms infrastructure but piggyback on other operators' networks to sell services to consumers. "We have people looking and studying the potential opportunities in MVNOs," Mr Sultan said.

Three MVNO licences are due to be issued in Saudi Arabia and Mr Sultan said du was "studying … whether we're going to bid or not on that".

He said du would evaluate similar opportunities in other markets, but added "no strategic decision has been taken" on a move overseas. Mr Sultan ruled out entering new markets as a fully fledged operator, which would involve an acquisition or costly investments in infrastructure.

"Going abroad with a standard mobile-network operator model … is not on the agenda today," he said. Analysts said it made sense for du to explore MVNOs outside the UAE.

"Du has good reason to keep an eye on MVNO developments in this region and beyond," said Matthew Reed, a senior analyst at Informa Telecoms & Media.

Ibrahim Masood, a director and the senior investment officer for asset management at Mashreq, said he did not expect du to expand overseas "for the next couple of years".

But the MVNO route made sense, he said. "All you need to put in place is the distribution channels, and that's it. You don't really need to invest in a general licence or, more importantly, a network."

Du, which launched commercial services in 2007, said in a financial statement yesterday it had a 46.7 per cent share of the UAE mobile market as it approaches parity with Etisalat.

The increase in its mobile-subscriber base helped to push up net profits to Dh666 million (US$181.3m) before the royalty it pays to the Government, up from Dh412m during the same period last year.

Du's royalty fee is set retroactively. Mr Sultan said the company provisioned for a royalty payment of 50 per cent net profit in the first quarter, bringing the net profit down to Dh333m.

Its revenues increased to Dh2.4 billion, up by 20.1 per cent compared with the first quarter of last year. Revenues from du's mobile business made up Dh1.9bn of that, an increase of 21.8 per cent on last year's quarter.

Aside from more mobile subscribers, du also reported an increase in clients surfing the Web using their phones.

The operator said it more than doubled mobile-data revenues in the first quarter to Dh297m, up from Dh141m in the first quarter of last year.

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