Du's profit rises as royalty decision looms

UAE telco increases mobile subscribers and profit as growth continues

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Du's profit rises as royalty decision looms Du CEO Osman Sultan says he hopes to find out by the end of the year what Du’s royalty payment will be.
By  George Bevir Published  November 1, 2009

The CEO of UAE operator Du said he hopes to find out by the end of the year how much the telco will have to pay the UAE government in royalty fees, as Du saw its pre-royalty third-quarter profit rise to AED157.1 million ($42.78m), up 36% on the previous quarter.

In the last quarter of 2008, Du set aside AED4 million from its AED82 million net profit, but in the first half of this year it increased the amount to half of the firm's net profit, in line with the amount paid by incumbent operator Etisalat to the UAE government.

"We are still waiting for a decision," Du CEO Osman Sultan said. "Usually the royalty on new operators is a different story, but we cannot prognosticate.

"We hope to have a decision before the end of the year. We really look forward to having a decision before the end of the year, and we are provisioning a very conservative 50% in our books.

Sultan said the matter was "in the hands of the authorities". "We asked them for final decision on this, and we are waiting. We hopefully are looking forward to having their answer on that matter before the end of the year."

Sultan suggested that he would like to see an asymmetric royalty scheme put in place.

"There were talks in the beginning, when Du was created, that there will be a different pattern, as is usually the case for an operator that is not even starting to make profit to ensure that this operator will have the means to play its role and be competitive."

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