Emirates Integrated Telecommunications Company, the parent company of Dubai-based telco Du, has reported a drop in net income for the first half of the year to AED570 million ($155m), largely as a result of a drop in mobile revenues impacted by the Covid-19 crisis.
As a result of the coronavirus-enforced movement restrictions and working from home measures employed over the period, the company’s prepaid mobile usage took a hit with H1 mobile revenues declining to AED2.81 billion ($765m).
“Financially, we have seen, as expected, a severe negative impact on our business coming mainly from mobile revenues, as we are structurally more exposed to the prepaid sector and from ‘other revenues’ due to the lockdown and travel restrictions,” said Johan Dennelind, CEO of EITC.
Half year revenues totalled AED5.66bn ($1.5bn) for the same period, the company said in a statement.
In a bid to address the erosion in EBITDA and net income, the company has implemented a “cost efficiency programme”, which it is hoped will see a recovery in Q3. This includes an optimisation of resources, reduction in marketing spend and renegotiation of supplier contracts.
The lockdown measures, however, helped boost fixed revenues for the first six months of the year, which continued to grow at a rate of 4.8 percent year-on-year to AED1.29bn ($351m), reflecting a healthy increase in the subscriber base fuelled by the higher home connectivity needs during the quarter.
EITC’s mobile subscriber base was 6.42m at the end of Q2, down from last year, mainly due to the combination of lower sales due to movement restrictions and the churn lag.
However, fixed customer base reached 226,000 subscribers by the end of Q2, up by 6.8 percent from Q2 2019.
To sustain the increase in data traffic across the country and the company’s deployment plans, EITC invested in Q2 AED509m ($139m), equivalent to 19.1 percent of revenues. In addition to investments in capacity upgrades and network maintenance, Capex were also allocated to 5G network rollout and the implementation of digital transformation initiatives.
Dennilend said: “While the Covid-19 situation has impacted the business negatively in the short term, it has also demonstrated the relative resilience of our model as a vital sector for the economy and confirmed the need to accelerate our transformation towards more digitalisation, higher efficiency and further technology developments (Cloud, 5G, AI, ICT, etc.) to cope with the evolving needs of our customers.”
The board of directors approved the distribution to shareholders of an interim dividend of AED589m ($160m), equivalent to an interim dividend per share of 0.13AED.
Source: Arabian Business |NewsColony