UAE telecom market grows with competition (page 1 of 3)

In 2006 the UAE's telecom market was still a monopoly, with government owned operator Etisalat the loan choice. But the entrance of telecom operator du in February marked a vital shift.

In less than a year du has managed to grab a 15 per cent of the mobile telecom market and analysts predict that it will continue to grow in the years to come. "Du is a start-up in a mature market, but because of the commercially driven management, we expect du's market share to reach 30 per cent in 2010," said Marise Ananian, telecom research analyst at investment banking firm EFG-Hermes.

For now, Etisalat will continue to dominate the market, having both a strong foundation and infrastructure which dates back to 1976. "One of the biggest challenges was competing with a company that already had infrastructure set up for more than a decade," admits Osman Sultan, CEO of du.

Another challenge du faced is not having a sister company in the market to guide the way. "Unlike other telecom companies in the region we didn't have a back to rely on, like Mobinil in Egypt had Orascom and Vodafone Egypt had Vodafone International," he added. Being a "stand alone" company du had to rely entirely on finding its own niche in the market and to attract both existing and new subscribers.

There were initial reports of unhappy customers struggling to get a connection when they wanted to make calls. Sultan told AME Info that "bad connection" problems are no longer an issue for customers.

"The stage of being a new-comer network is now behind us," he said. Currently du covers 85 per cent of its population on its own network, while the remaining 15 per cent is covered under a National Roaming Agreement with Etisalat.

Du currently claims it has more than one million mobile subscribers, while Etisalat registered 6.3 million subscriptions, which put the rate of penetration at an all time high of 150 per cent, telecom officials said. Sultan expects further growth by year end.

According to government statistics in 2006, the UAE's population is 4.6 million, which means that there are about 178 mobile numbers in circulation per 100 people, or about two sim cards per person. "With [this] penetration rate, the UAE is among the world's most technologically advanced countries in the world," Mohammad Hasan Omran, Etisalat chairman told a telecom conference last month.

But Andrawes Snobar, Senior Research Analyst at Jordan-based telecoms consultancy Arab Advisors Group, believes that these rates are "over inflated" by the companies, as no definition was set by the country's Telecommunications Regulatory Authority (TRA).

"The penetration rate is inflated because companies just lump active, non-active and prepaid subscribers together without any set definition from the TRA," he told AME Info.

Wael Ziada, telecom analyst at Egypt's EFG Hermes agrees. "Due to the lack of an active subscriber definition, I believe that about 25 per cent or less of du's reported mobile subscribers are non-active," he said.

Sultan admitted that du counts both active and non-active subscribers in its numbers. "We do follow the international definition of an active subscriber, which is basically an individual who makes at least one call over a period of 90 days," he said.

But he was not prepared to reveal the true active users figure unless competing telecom giant Etisalat does the same.