Etisalat details investment strategy

Minister of Communications and Chairman of Etisalat Ahmed Al Tayer has detailed Etisalat's plans for investment and the shape the market will take.

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By  Jon Tullett Published  January 25, 2001

UAE telecoms is set to benefit from increased infrastructural investment in the next three years, but will not see the introduction of a liberalised market structure for the foreseeable future.

Minister of Communications and Etisalat chairman Ahmed Al Tayer told Al Khaleej newspaper that Etisalat will increase its investment from four billion Dirhams to six billion over the next three years as the telco invests in the internal telecom network and explores third generation wireless technology. That reflects the company’s improved profits, which grew 21.7% last year, from Dh 1.971b to Dh 2.4b.

That investment will be entirely internally focussed – Al Tayer says although Etisalat has been invited to develop the telecom networks in other Arab countries it has declined these offers because of the high costs and heavy manpower requirements. “We are raising our development investments because the local market is more important for us,” he said. “The company works on improving profitability, expanding its activities and reducing costs”

In the past, Etisalat has been involved in project with 70 other countries or companies but these initiatives failed because of the high cost, Al Tayer said. The telco does have interests in Sudantel, Zintel and Qatar, however.

The minister also stressed his views on maintaining a controlled monopoly of telecom in the country. Although Etisalat would able to compete with foreign telecom firms, he explained that there would be little gain and substantial risk to allow liberalisation of the market at this time. “New entities do not aim at penetrating markets. They want to control. We notice this in negotiations and conferences,” he said. Al Tayer also expressed disappointment with the level of localisation companies have accomplished. “Where are UAE-based foreign companies. The free zones are all of foreign forms. How many UAE nationals do they employ? We called for Emiratisation in the banking sector but [they have] contributed with very little. They make profits here more than at home.”

Despite the World Trade Organisation’s impending deadline for liberalisation of telecom markets, Al Tayer said the UAE would not suffer repercussions because of low taxes and no problems in capital, but he pointed out that he considers the WTO requirements to be “the requirements of countries, multi-nationals and pressure groups.”

Subsidiaries of Etisalat, such as E-vision and EIM (Emirates Internet and Multimedia) might launch public share offerings, but they would need to establish themselves as stable and profitable first, Al Tayer said. “We have this idea, bit E-vision and EIM will not be marketed or sold to the public unless they become successful. We cannot sell UAE nationals things that have not been proven yet.”

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