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Abu Dhabi: Shifting telecoms strategies
Published in Daily News Egypt on 08 - 11 - 2010

Telecommunications providers in the UAE are re-aligning their strategies and upgrading their networks amid greater competition, high mobile saturation and shifting revenue patterns.
High saturation levels mean the two operators, Etisalat and du, are exploring new, non-traditional telecoms services – such as online content and e-books – as potential revenue spinners.
“We believe that the UAE's mobile voice market is nearing full penetration and, in the absence of special promotional offers, both operators will find it difficult to add mobile subscribers in the numbers they historically have done,” Irfan Ellam, a telecoms analyst at Al Mal Capital, a local investment bank, told the National in October.
Each company has its own ideas as to how they might be able to capture new business. Etisalat, the largest operator in the UAE, for instance, plans to launch a number of new consumer and business services by the end of 2011, including video-calling, mobile stock trading and on-demand TV.
The strategy entails offering more mobile data services to consumers as voice revenues decline, and Etisalat has estimated that by 2013 non-traditional telecoms services could make up as much of half its income. As part of the strategic shift, the company has identified nine sectors, including health and education, as potential markets for future mobile services.
Meanwhile, du, the UAE's second-largest operator, is looking to the Internet for service expansion. The operator aims to attract online users via its website, which provides music, videos, gaming, news and its own version of a social network. Profits are expected to be gained from online advertising and other revenue-sharing agreements.
High saturation levels among mobile subscribers are the main reason for the new playing field. Etisalat subscribers in the UAE increased by 10,000 in the third quarter to 7.81 million, but in the past the operator enjoyed net additions ranging in the hundreds of thousands.
A glance at Etisalat's third quarter results suggests that the high saturation levels, coupled with increased competition from du, have impacted earnings. Profits declined 23 percent from the same period last year, while net income fell to $473 million from $612 million a year earlier.
Etisalat, which already offers services in 18 countries in the Middle East, Africa and Asia, counting more than 100 million customers, is set to become even bigger through the purchase of a controlling stake in Kuwaiti operator Zain. In a recent statement Etisalat said that it believed its $10.5 billion offer for a 46 percent stake in Zain, which has some 34 million customers, could be accepted in a “number of weeks”.
Both Etisalat and du are also focused on upgrading their domestic networks, with du recently announcing a $108.9 million investment in mobile infrastructure. The funds will go towards reducing phone battery consumption and boosting data speeds, according to du, which says it is working with Nokia Siemens Networks to increase the capacity of voice calls carried and boost data rates to up to 42 megabytes a second in selected locations.
Etisalat is also giving its mobile infrastructure a makeover. It recently announced its upgrade will allow a maximum mobile internet speed of 42.2 megabytes a second by the last quarter of 2010. The boost in capacity represents a significant increase in speeds – more than double the maximum previously available.
Shifting trends within the telecoms market are creating new challenges and opportunities for the emirate's operators. This evolution of the industry, however, illustrates that robust but fair competition is playing an important role ameliorating the overall sector. As outlined in the Abu Dhabi Economic Vision 2030, the government wants information and communication technologies to be an integral part of the emirate's development. Greater competition, new services and an enhanced network are good building blocks for the future.


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