“It’s a complex operation but we see this before the end of the year ... a more or less nationwide rollout,” Sultan said during a conference call with reporters to discuss first-quarter results.

The telecoms carrier, which now has a 41 percent share of the UAE mobile market, reported a first-quarter net profit of AED205.8 million ($56 million) after providing for royalties, up from AED97.1 million in the year-earlier period and in-line with forecast of AED203.7 million by analysts polled by Reuters.

First-quarter revenue jumped 29 percent to AED2.04 billion, compared with AED1.58 billion a year earlier.

Du said it added 272,000 net active mobile subscribers during the quarter and invested AED477 million in infrastructure.

“It was a very strong quarter in terms of subscribers given that the market is near saturation,” said Irfan Ellam, vice president and telecoms analyst at Al Mal Capital.

“That’s the function of more properties being completed in new Dubai where du operates.”

Sultan said du, which paid a 15 percent royalty to the government last year, will continue to provision for royalty payments at 50 percent of its profits until it is advised by the government on the rate for this year.

Du, which does not pay dividends, is obligated as part of its licensing agreement to pay an annual royalty to the Emirates Investment Authority, an UAE sovereign wealth fund that owns 39.5 percent of the carrier as well as part of its rival, Etisalat.

“It is healthy to be conservative to not have any surprises” he said of the royalty, which effectively acts as a profit-sharing scheme for the EIA.

Du, as a young company, was ordered in February to pay at the 15 percent rate in 2010, a far cry from the 50 percent of annual net profit that Etisalat paid as royalties.

“In the absence of any indicators, du wanted to play it safe by provisioning at the same royalty rate that is currently being paid by Etisalat,” said Simon Simonian, telecoms analyst at Shuaa Capital.

Simonian said the royalties rate in the UAE, based on the 50 percent of revenues paid by Etisalat, is very high and has prompted Etisalat to lobby for a reduction in rate. Qatar, by comparison requires a 12.5 percent royalty, while in Saudi Arabia, it is 10 to 15 percent of revenue, Simonian added.

Al Mal Capital’s Ellam said it is likely that the 50 percent royalty will be lower again for du this year, boosting profits further.

Sultan said the company is also in advanced discussion with banks to refinance part of a AED3 billion($816.8 million) loan maturing in June as it weighs its refinancing needs for development going forward.

“We will not be going out seeking the totality of the AED3 billion loan,” he said. “Discussions are happening with banks to see how we can refinance these needs.”

The executive said du’s growth momentum will continue this year in both fixed-line and mobile services, with no interruption seen in BlackBerry usage as a result of a change in security policies implemented by the Telecommunications and Regulatory Authority (TRA).

Under the new policy, only businesses with 20 or more subscriptions will be allowed to use high security accounts on the BlackBerry Enterprise Server — a service provided by Canada’s Research in Motion to encrypt e-mail messages between Blackberry devices and a computer.

The move comes months after the UAE dropped a threat to suspend BlackBerry services after resolving a dispute over access with RIM.

Sultan said the new policy, which will go into effect on May 1 for the company, does not raise any concerns.

“In comparison of the situation of last summer, there is complete continuity,” he said.

“I don’t see any real reason for frustration.”