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By Alexander Cornwell
DUBAI Feb 16 Emirates Integrated
Telecommunications Co is targeting 1 billion dirhams
($272 million) in savings by 2019 as government taxes erode
profit at the United Arab Emirates' second-largest telecoms
company, its chief executive said on Thursday.
Results have been under pressure since late 2014, with the
pace of growth in the mobile market unable to match the rise in
the rate of royalties paid to the government, which have
increased steadily since 2012.
The telecoms firm, commonly known as du, expects "at least"
1 billion dirhams in savings over three years from changes to
its costs of sales, operational expenses and capital
expenditure, CEO Osman Sultan told reporters on a conference
call. He later said the figure could be higher.
The firm, which ended rival Etisalat's domestic
monopoly in 2007, started restructuring in the second quarter
last year which has included "tens" of job cuts, Sultan said on
The company this week reported a 20 percent fall in
Du's royalty payment in 2016 increased to 2.111 billion
dirhams compared to 1.921 billion dirhams in the previous year,
according to Reuters calculations. It is yet to be given
guidance by government for the 2017 royalty rate, Sultan said.
Du will also increase focus on non-traditional revenue
streams including hosting data centres, managed services and
services related to smart cities, Sultan said.
Dubai is embarking on a major smart city strategy to
integrate the emirate's infrastructure with online technology .
"This is where the highest growth will come from," Sultan
The telecom announced on Jan. 31 it had acquired a licence
to operate Virgin Mobile-branded services in the country.
Earlier on Thursday du said its board was recommending a
full-year dividend of 0.34 dirhams per share compared to a
dividend payout of 0.43 dirhams per share in 2015 which included
a special dividend payment of 0.10 dirhams per share.
($1 = 3.6726 UAE dirham)
(Reporting by Alexander Cornwell; editing by Jason Neely)