du reports 12.6% profit growth in first half as service revenue climbs

du reports 12.6% profit growth in first half as service revenue climbs

Emirates Integrated Telecommunications Company, operating as du, delivered a 12.6% increase in first-half net profit to Dh1.63 billion as service revenue expansion and disciplined cost management offset weaker customer activity during the second quarter.

The UAE's second-largest telecommunications operator reported revenue of Dh8.20 billion for the six months ended June, up 5.8% year-on-year, while service revenue climbed 7.7% to Dh6.03 billion. Earnings before interest, tax, depreciation and amortisation advanced 10.5% to Dh4.03 billion, with the EBITDA margin expanding by 2.1 percentage points to 49.2%.

Du operates in a regulated duopoly alongside e& (formerly Etisalat), with both companies controlling 97.5% of sector revenue in a market valued at $13.95 billion in 2026. The UAE telecommunications market is projected to reach $16.95 billion by 2031, growing at 3.98% annually.

The board approved an interim cash dividend of 26 fils per share, representing an 8.3% increase from the previous year. The company's market capitalisation stood at approximately $12.7 billion as of March 2026, making it one of the region's most valuable telecommunications firms.

Regional tensions dampen quarterly performance

Second-quarter results reflected slower momentum, with revenue rising 4.6% to Dh4.08 billion and net profit increasing 9.8% to Dh798 million. Service revenue grew 6.7% to Dh3.01 billion, while EBITDA advanced 9.2% to Dh1.99 billion. The quarterly EBITDA margin widened by two percentage points to 48.8%.

Du attributed the moderation to regional tensions that affected subscriber activations, tourism flows and consumer spending patterns during the period.

Subscriber base shows mixed trends

The operator closed the second quarter with 9.3 million mobile subscribers, up 1.6% from a year earlier but below the 9.7 million subscribers recorded in December 2025. Growth had slowed from previous periods due to lower activation levels linked to the regional conflict.

Postpaid customers expanded 9% to 2.1 million, supported by demand for premium consumer packages and enterprise connectivity services. Prepaid subscribers declined 0.4% to 7.2 million, reflecting reduced tourism activity partially offset by gains from prepaid product offerings.

The fixed customer base grew 5.5% to 744,000 subscribers, compared with 735,000 at year-end 2025. Du's Home Wireless service continued attracting customers seeking flexible connectivity, while fibre broadband demand remained stable.

Revenue streams diverge

Mobile revenue increased 3.7% during the quarter to Dh1.8 billion, while fixed revenue surged 11.6% to Dh1.2 billion, driven by enterprise connectivity and Home Wireless adoption. Other revenue declined 0.8% to Dh1.1 billion due to weaker handset sales and the absence of non-recurring information and communications technology revenue recorded in the prior year.

Capital expenditure accelerates for data centres

Capital spending rose 19.8% in the second quarter to Dh653 million, from Dh545 million a year earlier, pushing capital intensity to 16% of revenue from 14%. The increase reflected continued telecommunications network investment and accelerated deployment into data centre infrastructure.

Du is moving closer to launching services under an agreement with an unnamed global hyperscaler, though it did not disclose the expected launch date or investment value. The UAE data centre market was valued at $2.38 billion in 2025 and is projected to reach $6.70 billion by 2031, growing at 18.82% annually, driven by hyperscale investments and AI workload demand.

First-half capital expenditure totalled Dh1.04 billion, up 12.7%. Despite higher spending, operating free cash flow advanced 9.7% to Dh2.99 billion for the half-year and increased 4.6% to Dh1.34 billion in the second quarter.

Diversification through venture capital

In June 2026, du launched du Ventures, a $50 million corporate venture capital fund managed by investment firm Shorooq. The fund targets early-stage and growth companies developing technologies across fintech, artificial intelligence, cybersecurity, cloud, gaming, enterprise solutions and customer experience.

Fahad Al Hassawi, Chief Executive Officer, said the company had accelerated investments in cloud, artificial intelligence and data centre services while managing costs to protect margins.

These efforts enabled us to sustain both top-line and bottom-line growth despite a softer monetisation trend and a cautious spending environment, demonstrating the resilience of our business model.

Malek Al Malek, Chairman, said du had continued to diversify its investment programmes and strengthen digital infrastructure capabilities during the first half.

The Board remains confident in management's ability to navigate evolving market conditions while maintaining a strong customer focus, operational excellence, and disciplined execution.

Emirates Investment Authority holds a 50.1% stake in du as the largest shareholder, while Mubadala Investment Company sold a 7.55% stake for $858 million in September 2025. Since launching mobile telecommunications services in February 2007, du has transformed the UAE market from a monopoly held by Etisalat since 1976 into a competitive duopoly.