UAE sets Etisalat, Du royalty fees

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.