Du reports Q4 net profit falls 10%
Rise in taxes blamed for profit loss
UAE telecoms operator, du has reported a 10% fall in fourth-quarter profit, missing analysts' estimates as it paid a higher tax rate on its earnings compared with a year earlier, Reuters reported.
The firm made a net profit of AED 512.7m in the three months to 31 December down from AED 570.3m in the year-earlier period, it said in a statement.
"Du is likely to continue to experience pricing pressures from competitors and the popularity of VoIP (Voice over IP) services, a trend the entire industry is facing," the company said.
VoIP providers such as Skype offer free internet-to-internet calls and internet-to-phone calls at much cheaper rates than conventional telecom operators. Only du and Etisalat are licensed to offer VoIP services in the UAE, but residents can usually still access external providers.
Analysts polled by Reuters had on average forecast du would make a quarterly profit of AED586.7m.
Du's 2014 annual profit was AED2.11bn, up from AED1.99bn dirhams in 2013.
Both du and Etisalat pay taxes to the UAE's federal government which announced that it would steadily raise royalty fees for du from 2012 to 2016. These are levied on licensed revenue and profit.
In 2014, du's pre-tax annual profit was AED 3.70bn dirhams and it paid AED1.59bn in royalties, giving an effective tax rate of 43%. This compares with 36% in 2013. Fourth-quarter profit before royalty was AED 915.6m, up 27.8 % on the prior-year period.
Fourth-quarter revenue was 3.23 billion dirhams - up more than 12 % on the prior-year period - and of which 2.43 billion dirhams came from mobile services, with fixed line, wholesale and broadcasting providing the remainder.