Are the 2019 results announced recently by Emirati operator du positive, negative or both? It rather depends on how they are interpreted, it seems.
The company, owned by Emirates Integrated Telecommunications Company (EITC), has announced that annual like-for-like net profit increased by 9.3 per cent in 2019. This apparently takes into account over $400 million of capital investment in next generation networks.
Net profits grew to $471 million in 2019, as the company began the rollout of its 5G mobile networks. The 5G rollout necessitated a 46.8 per cent increase in capital expenditure on a year-on-year basis, according to the figures.
However, other reports highlight a 1.3 per cent slip in full-year net profit, led by a fall in mobile prepaid and handset sales, as well as the investment in 5G roll-out.
Discussing the declines, du mentioned pressure on mobile prepaid revenues, which were adversely impacted by pricing, competition and the negative impact on the base of SIM registration disconnections.
Mobile revenues declined by eight per cent, the firm said, which forced du to report a 6.2 per cent decline in 2019 revenue. However, the company was keen to highlight the like-for-like profits mentioned earlier with profits during the last quarter of the year surging 30 per cent. So who’s right?
Capital expenditure on 5G network rollout, fibre network expansion and IT initiatives certainly took a large chunk of cash. But the subscriber base continues to grow, while the impact of SIM registration is likely to lessen soon. Thus, while the news is variable, there seems no obvious reason for investors to worry.