The news: du’s board of directors, at its meeting yesterday, proposed the following: - A reduction in the company’s share capital, subject to the approval of shareholders as well as regulatory approval. - Amending the company’s articles of association to comply with the requirements of the Commercial Companies Law number 2 of 2015, subject to shareholders approval. After obtaining the necessary approval from the Securities and Commodities Authority, du will invite shareholders to convene to vote on the board’s decisions.   Our view: We view the board’s decision to reduce du’s capital as positive for shareholders, as it will: i) increase shareholder value, which adds to an already generous dividend policy, in our view; and ii) improve the efficiency of the capital structure, which will lead to better return metrics (ROE, ROIC, ROA, etc.). At the moment it is not clear how much capital the company plans to reduce or how it plans to do it, but we suspect it is more likely to be done through a share buyback rather than a conversion of capital into debt or a change in the level of non-distributable reserves. We await more details to be able to quantify the impact on our TP and the share price. Moreover, it is not clear what the amendment of the articles of association is meant to achieve; we believe this particular item will have been the source of speculation over the past week on the possibility of allowing foreign ownership of the stock. We will seek more clarity on this and will provide further insights. (company, Omar Maher)   du (DU): AED6.16 as of 14 December 2016, Rating: Neutral, TP: AED6.02 per share, MCap: USD7,673 million, DU UH / DU.DU