Teleco: Du

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Dalamar
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Teleco: Du

Mensajepor Dalamar » 19 Feb 2013 11:38

UAE telecommunications provider du more than doubled its profit after royalties during the fourth quarter to US$270m, compared to the same period in 2011, according to the company.

The figure topped off a record year for annual revenues and profit, with du recording a net profit after royalties of US$540m, up from US$300m in 2011.

The company’s revenue increased 14.7 percent to US$2.77bn during the year, while net profit before royalties grew 55.8 percent to US$768m year-on-year.

The telco said it attracted more than 1.2m new customers in 2012, including nearly 500,000 in the fourth quarter, taking its market share to an estimated 48.7 percent, up from about 47 percent. The company competes with larger rival Etisalat in the UAE's fixed line, internet and mobile telecommunications markets.

The increase in net profit during the fourth quarter was partially due to the company writing back tax provisions.

The federal government’s new royalties formula introduced in December includes a levy worth 5 percent of revenues as well as 17.5 percent of profit.

Du had provisioned to pay 50 percent of its profit in royalty fees through the year but the new formula meant it paid less tax as a percentage of profit than in 2011, enabling it to write back some of the provisions it set aside in the first nine months of 2012.

Across the year, du paid nearly US$230m in royalties – about one-third of its profit before royalties.

There had been concerns late last year that du, which unlike the Gulf country’s other telecommunications provider Etisalat does not have any sources of international revenue, would see its earnings suffer as a result of the government raising the percentage of royalty fees it must pay.

The profit comes despite du restructuring operations and outsourcing jobs in a bid to further boost earnings.
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Dalamar
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Re: Teleco: Du

Mensajepor Dalamar » 20 Feb 2013 07:43

Dubai telecom operator du makes its largest one-day gain in ten months, surging to its highest close since late 2008 after it posted estimate-beating earnings.

Shares in du surge 11.7 percent to AED4.12, its biggest gain since April 2012.

Du's fourth-quarter profit more than doubled to AED994m (US$270.6m) in the three months to December 31 as it wrote back tax provisions.

UAE telecom operators are taxed via royalties under license agreements with the federal government. The latter announced a new formula in December that includes a levy on revenues as well as profits.

Du had provisioned to pay 50 percent of its profit in royalty fees through the year, but the new formula means it pays less tax as a percentage of profit than 2011, enabling it to write back some of the provisions it set aside in the first nine months of 2012.

The firm has also proposed a cash dividend of AED0.3 per share.

"The surprise was on earnings as well as dividend yield, which at 8 percent is very attractive," says Ali Adou, portfolio manager at The National Investor. "The royalty fee restructuring will be negative for du after three years, but for the time being, the stock looks very attractive."
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