18 Feb 2011
The UAE’s incumbent telecoms operator Etisalat has entered into talks with the government to reduce the percentage deducted from its annual profits, following a government decision to slash rival Du’s royalty fee to 15% earlier this week. Reuters reports that Etisalat, which pays 50% of its net profits to the federal government, has said that equal fees would be a positive development for the sector. ‘We are aware that the government is studying the royalty fees in coordination with an international advisor and the operators on the mechanism for dealing with royalty fees in the future,’ Etisalat chairman Mohammed Omran said in a statement. He added that the company had ‘no clarity’ on Du’s 15% royalty rate but noted: ‘If this percentage applied to both companies it will reflect positively on the sector, given that equal percentages are applied to all operators in most of the countries adapting the royalty fees system.’ Du, which broke Etisalat’s monopoly in 2007, has been setting aside funds since 2008 for the royalty fee, which the firm was not required to pay until it became profitable. Analysts said the rate cut could result in the company’s profit for 2010 doubling.