du to ring in the changes

An 'innovative' competition strategy could see the telco's share price rise 22%.

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By  Safura Rahimi and Reuters Published  June 10, 2007

The stock value of du, Dubai's second telecoms operator, could rise 22% from its close last week, according to research by HC Securities.

The Egyptian stock broking firm gave the telco's stock a 'strong buy' recommendation, stating that the management at du appears to have an 'innovative' strategy for competing with Etisalat in the fully-saturated UAE market.

According to the HC Securities report, the main drivers behind du's growth are the use of 3G technology and growth in the economy, set to lead to a rise in investments and to boost the number of foreign workers and GDP per capita.

"We believe that du will capture around 820,000 subscribers by the end of the year representing a market share of around 12.0%," said the HC report.

"Moreover, du will be able to maintain significant growth in its subscriber base until it reaches 2.3 million by the end of 2010, representing a market share of 32.0%."

du CEO Osman Sultan told Gulf News last month that the company had attained over 400,000 subscribers and that it targets a market share of over 30% by the end of 2009.

The telco entered the UAE market in February. In order to gain market share the company offered call tariffs with pay-by-the-second billing where users pay 0.5 fils for ever second used.

"du's management was well prepared for the launch with an innovative per-second billing product compared to Etisalat's per-minute charge," the report said, adding the strategy had helped du sign up 250,000 subscribers by the end of the first quarter.

The company regularly launches new marketing campaigns aimed at convenience to maintain its share in the telecoms market.

In April du introduced its ‘Mobile Payment Service' that lets customers pay or recharge their bills by sending an SMS and including their credit card information.

HC Securities estimated the stock's fair value at 6.50 dirhams ($1.77). du closed on Thursday at 5.32 dirhams.

3815 days ago
Noddy

Buyers beware.  
This reads like marketing hype from someone with shares to sell.

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