Amid rising costs and a drop in mobile subscribers, the UAE’s telecoms operators Etisalat and du are betting on 5G and digital solutions to boost their bottom lines.
Emirates Integrated Telecommunications Company , du’s parent company, posted a 7.4 per cent fall in third-quarter net profit due to a one-off item in last year’s comparative period and a dip in mobile subscribers.
Etisalat, the UAE’s biggest telco, reported a decline of 4.2 per cent in quarterly net profit as expenses and expenditure rose.
Both companies fell short of the median estimates of analysts who were polled by Bloomberg.
However, despite a sluggish run in the quarter, in terms of year-on-year net profits, the UAE telcos are in a good position for a profitable future, analysts said.
“We expect the UAE to be a growth market in the longer term,” Nishit Lakhotia, head of research at Bahraini investment bank Sico, told The National.
“With the introduction of 5G and digital solutions, it will be a leader on the technological footprint, offering sufficient opportunities for both telecom operators to capitalise.”
Sico forecasts the market will remain profitable for both Etisalat and du.
“As we look towards a smart future, we are working diligently to bring next generation technologies such as 5G, IoT [Internet of Things], AI and blockchain into our network,” said Osman Sultan, du chief executive.
“In the UAE telecoms market fixed business appears to remain robust, whereas the mobile prepaid segment is shrinking while growth is visible in the post-paid segment,” said Mr Lakhotia.
He added that du’s third-quarter results were marginally weak due to lower gross margins and higher royalty and taxes.
International Data Cooperation in the US observed a positive top line growth for the UAE telecoms sector.
“Both telecoms operators in the UAE reported a positive year-on-year growth in 2017, driven by growth from the fixed line, mobile post-paid, devices business and digital services segments,” said Krishna Chinta, programme manager, telecoms and IoT [Internet of Things] for the Middle East, Africa and Turkey at IDC.
This growth momentum is expected to remain through 2019 driven by a stronger consumer demand, opportunities emerging from Smart Dubai and national transformation programmes.
“There are also a number of upcoming projects in preparation for Expo 2020,” said Mr Chinta. – The National