du will target renewed prepaid momentum to end earnings slump
The campaign to remove unregistered SIM cards forced du to cancel more than 10% of subscribers in the first quarter of 2015
du needs to regain momentum in the prepaid mobile market if it is to counteract higher government taxes and halt an earnings slump, the chief executive of the United Arab Emirates' No.2 telecom operator said on Sunday, as reported by Reuters.
Osman Sultan's remarks came after the company reported an 11.3% fall in its second-quarter net profit to AED445.4m ($121.3m), its seventh successive quarter of declining earnings.
A campaign to remove unregistered SIM cards by the UAE government forced du to cancel more than 10% of subscribers in the first quarter of 2015, including a number of heavy-using customers, which du was still recovering from, Sultan said on a conference call with reporters.
"We will have to look at our prepaid market and regain momentum. We are seeing some signs that certain indicators are moving in the right direction and I hope these will remain sustainable," he said.
Prepaid mobile phones are more widely used by low-income workers, and this job segment has been pressured across the Gulf as state spending on construction projects has been trimmed in the wake of lower oil prices, forcing such schemes and wages to employees to be delayed.
In total, mobile revenue fell 2.8% year on year in the second quarter to AED2.17bn despite a 4.5% increase in data revenue.
Like telecom operators around the world, du was working on ensuring the growth in data services was better reflected in its earnings, Sultan said.
Overall revenue was flat at AED3.07bn, but the higher royalty payment meant net profit after taxes declined in the three months to June 30.
Analysts at EFG Hermes and SICO Bahrain forecast du would make a quarterly profit of AED433.8m and AED487.1m, respectively.