11 Dec 2012
The United Arab Emirates government has established the royalty fee that the country’s two telecoms operators, Emirates Telecommunications Corporation (Etisalat) and Du, must pay for the period 2012-2016. Incumbent Etisalat is required to pay an annual rate of 35% of its net profit plus an amount equal to 15% of its revenue for 2012-15, followed by royalty of 30% of its net profit and 15% of revenue in 2016. Second national operator Du, meanwhile, is required to pay a 17.5% royalty on profits and 5% on revenues in 2012, although the rates will steadily rise to 20% (profit) and 7.5% (revenue) the year after that, 25% and 10% in 2014, and 30% and 12.5% in 2015. Finally, in 2016 the profit royalty rate for Du will remain level at 30%, although the revenue fee will increase to 15%. Commenting on the decision, Ahmad bin Byat, chairman of Du, said: ‘We welcome today’s decree on royalties by the Ministry of Finance. This decision provides us with visibility for 2012 and subsequent years, giving Du and its stakeholders a sustained period of certainty in terms of our liability with respect to royalties payable to the Federal Government until 2016.’ In the year ended 31 December 2011 Du paid 5% of its revenue in royalties, plus 15% of its profit.