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Du faces 15% royalty payment

UAE's second operator to pay its first royalty for 2010

Du faces 15% royalty payment
UAE telco Du will make its first royalty payment to the government for the full year 2010.

Du, the UAE's second telecom operator, is due to pay the UAE's federal government 15% of its 2010 net profits as a royalty.

The royalty payment, which will be Du's first, will be for the full year ended December 31, 2010.

Du said that the royalty payment for subsequent years, including 2011, will be "advised to the company in due course".

Du will release its full year results for 2010 on March 3. In the third quarter of 2010, the company posted a net profit before royalty of AED326 million ($88.828 million), a 19% increase over the previous quarter of AED275 million ($74.931 million).

Du has taken a cautious approach to the issue of royalty payments, and is understood to have set aside some 50% of its net profits as a royalty payment.

In the last quarter of 2008, Du set aside AED4 million from its AED82 million net profit, and in the first half of 2009 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.

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