Emirates Integrated Telecommunications Co. (du.du): Resilient 2026 margins despite revenue guide reset; reiterate Buy

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Emirates Integrated Telecommunications Co. (du.du): Resilient 2026 margins despite revenue guide reset; reiterate Buy

Goldman Sachs Emirates Integrated Telecommunications Co. (DU.DU)

Data center economics are attractive but capital-intensive: Management said data

center EBITDA margins typically fall in the 50-70% range, but stressed that EBITDA is not

the only relevant metric given the capital intensity. du evaluates data centers based on

cash flow, capital allocation and returns. Management referenced typical IRRs of around

12-15%, depending on contract structure, counterparty, capacity, cooling requirements

and risk profile.

Data center demand remains strong: Management remains positive on UAE data

center demand, describing the market as one where demand exceeds supply. Data

centers remain an area where du intends to continue investing and strengthening its

position.

July trends show stabilization versus June: Similar to the earlier April update versus

March, management said July is showing stabilization versus June. However, it did not

provide a quantified update and continued to emphasize uncertainty around

population, tourism and regional developments.

Subscriber outlook remains difficult to project: Management said it is not possible to

take a firm view on subscriber evolution over the next six months because the trajectory

depends on population and tourism trends, which remain uncertain. Current guidance is

based on stability and continuation of the regional operating environment.

Capex remains back-end loaded: Management said capex will continue in 3Q and 4Q

across fixed, mobile, IT infrastructure and data centers. This follows the usual seasonal

pattern, with capex typically increasing through the year due to procurement and

deployment lead times.