Al Mal Capital just sent out a research note, upgrading their ratings for du, the UAE's second telecommunications company. While they have plenty of good things to say about the company ( ) what is worth noting is their figures on new customers, showing du is really dominating the market. Key numbers: This is a fairly bullish assesment, and I am skeptical that du will continue dominating the market like this for much longer. Remember that these numbers are a little skewed by the crazy second quarter results, when Etisalat actually lost customers for the first time in its history. That is unlikely to happen again. Read on for Al Mal's statement: ------PRESS RELEASE------- Al Mal Capital: du ratings review · We revise our target price for du to AED 3.99 from AED 3.00 and our rating to Outperform from Market Perform. · We projected a slowdown in UAE mobile subscriber growth in 2009 and this has indeed been the case, with a total of 796,000 net mobile adds by 9mo 09 versus 1.46mn for 9mo 08. The rate of slowdown, however, has not been as large as we forecast - we projected net mobile adds of just 523,000 for FY 2009. We project 229,000 net mobile adds in Q4 2009 bringing the our revised total active net mobile adds to 1.025mn for the year. · du has been the major beneficiary of this on-going growth, capturing 80.5% of mobile net adds 2009 YTD and projected to capture 76% by year end. · Mobile Number Portability (to be introduced in Q2 2010) should be a key catalyst for du. We project du to have 45.8% market share of active mobile subs by 2014, up from a projected 32.6% for YE 2009. · Infrastructure sharing should allow du to roll out its 3G network at a faster rate, which will be key in boosting mobile data usage. du is aiming to cover 90% of the UAE population by the end of YE 2010. With access to the Etisalat-built national FTTH network, we believe capex for du beyond 2011 will be mainly maintenance capex until it chooses the technology and formulates a strategy for roll out of 4G/LTE. · We expect UAE population growth to resume in 2010, up by 2% (albeit at a slower pace than in 2007 and 2008), with the impact of the global financial crisis on the UAE being less severe and of a shorter duration than anticipated. We project the UAE population to reach 6.3mn by the end of 2014. · Local loop unbundling to have limited impact in the near term. In order for du to gain potential fixed line and broadband customers, du will need to gain access and install equipment in Etisalat's exchanges, and this we believe, from a practical perspective, will take some time.