DTMFZ takes over Emaar’s telecoms arm

DUBAI Technology and Media Free Zone (DTMFZ) has acquired the communications arm of real estate giant Emaar Properties, Arabian Business can reveal.

  • E-Mail
By  Richard Agnew Published  May 29, 2005

DUBAI Technology and Media Free Zone (DTMFZ) has acquired the communications arm of real estate giant Emaar Properties, Arabian Business can reveal. The move, which precedes DTMFZ's expected involvement in the UAE’s new national telecoms provider, has seen the free zone company merge its telephone operations with those of Emaar’s IT unit, Sahm Technologies. DTMFZ, which is licensed to provide phone services within its business parks, such as Dubai Media City, Dubai Internet City and Knowledge Village, will also now serve tenants within Emaar's residential developments. The takeover follows a dispute between Sahm and the UAE's telecoms regulator, which says that the technology company has been operating without a licence when providing telephony and internet packages to Emaar's customers. A source close to DTMFZ said that Sahm’s communications arm has been combined with that of Dubai Internet City (DIC Telecoms), creating a company that could form the basis of the UAE's second telecoms operator. “We have been working with Sahm since we came into being [last year] because they have been providing unauthorised services,” Mohamed Al Ghanim, Telecoms Regulatory Authority (TRA) director general told Arabian Business. “DTMFZ has been operating under the Dubai law and Sahm has not, so … DTMFZ took it over,” he added. The TRA announced earlier this month that 40% of the UAE's second telecoms operator will be owned by the UAE General Pensions and Social Security Authority, with the rest held by an as yet unannounced company and private investors. One industry analyst said it was a “shoo-in” that DTMFZ, which is part of state-owned investment group, Dubai Holding, will be involved in the venture and that the timing of the acquisition indicates it is “re-organising itself” for the move. Both Sahm and DTMFZ had been put forward as frontrunners for the second licence when the TRA announced its liberalisation plans last year, with either likely to use the opportunity to expand their existing networks nationwide. Initially, the new entrant is expected to roll out a network covering the country’s highways, as well as Abu Dhabi, Dubai and Al Ain, before moving into other areas. The TRA said that it will sign the licence agreement with the second operator in July, but sources indicate that DTMFZ could announce it is part of the venture as early as next month. The second operator is expected to be capitalised at US$1.1 billion, while a partial IPO of its shares has been scheduled for later this year. Under the licence, the new entrant will be allowed to pitch a full range of mobile, fixed and internet services against those of incumbent, Etisalat. The state-owned operator is expected in the next few weeks to issue a reference interconnect offer (RIO) to the new company, which will propose terms and conditions by which it can use the incumbent’s network to carry voice calls and data services. “We are expecting the RIO to be released by Etisalat next month and the second operator will start negotiations from then," said Ghanim. Although no further fixed or mobile licences will be offered in the UAE until 2015, other areas of the telecoms sector are expected to be opened up to outside investors. The TRA has drafted licences for satellite mobile service providers such as Inmarsat and Thuraya and expects them to be awarded within the next two months. It is considering whether to allow companies to offer walkie-talkie type services to companies and government departments through terrestrial trunked radio (TeTRA) networks. Firms may also be allowed to rent capacity on the two major operators’ networks to offer internet services to customers. However, they would not be allowed to own their own infrastructure so their influence over retail pricing of internet packages would be limited. “Both Etisalat and the second operator will be facilities-based internet service providers (ISPs). As to whether we will allow other service providers to come in is a question mark which I need to discuss with the board,” said Ghanim. He also denied that the government-dominated structure of the new operator and block on further GSM or fixed licences would limit any impact on prices and customer service. “The market has to be regulated properly before we open it up and the only way to do that is to adopt a phased approach,” Ghanim said. “Since day one, when the decree came out, there was a press release that said that the second operator would have a similar structure to Etisalat and there would be big government ownership in the company. And that it will be a local company. Etisalat is a successful company. In Australia there is Telstra which is also partially owned by the government and it is very successful. [The two operators] will not be run like government agencies,” he added.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code