Etisalat eyes Dubai free zones

BUSINESSES within Dubai’s free zones could have a choice of phone and internet providers for the first time when the UAE’s telecoms market is liberalised, Arabian Business can reveal.

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By  Richard Agnew Published  July 10, 2005

BUSINESSES within Dubai’s free zones could have a choice of phone and internet providers for the first time when the UAE’s telecoms market is liberalised, Arabian Business can reveal. Etisalat aims to target firms within business parks such as Dubai Media City (DMC), Internet City (DIC) and Knowledge Village (KV) when the incumbent telco loses its nationwide monopoly later this year. It intends to enter discussions with the UAE’s Telecommunications Regulatory Authority (TRA) to secure clearance to operate in the free zones, which are currently served solely by DIC’s communications arm, DIC Telecoms. “Normally when the second operator comes [in], then definitely within the licence we should be able to connect anyone,” Mohammed Omran, Etisalat’s chief executive officer, told Arabian Business. DIC Telecoms has been widely tipped for a strategic role in the UAE’s second telecoms operator, whose formation was announced by the TRA in May. Although the group holds a monopoly within the free zones, Etisalat is expected to be keen to generate business from the large companies located there. One possibility is that competition will be gradually introduced into the zones if DIC Telecoms turns out to be the second operator, in order to protect it once it is launched. “If, once the telecoms market is fully opened up to a second national provider, and that provider has the ability to offer all types of services throughout the UAE territory, on terms and conditions no less favourable than those on which the incumbent does, then at that point naturally the incumbent should also be able to do the same in the free zones,” said Justin A. Connor, an attorney at regional law firm, Al Tamimi & Co. “However, until the market is fully declared open, regulators will frequently impose some limitations or restrictions on incumbents in certain markets in order to allow a competitor to more fully develop its service offerings,” he added. Globally, regulators have often imposed ‘dominant carrier regulations’ on incumbents that restrict them from competing in certain markets or for certain periods of time, in order to create a balanced playing field. The TRA announced in May 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. The company is expected to be capitalised at over US$1 billion, while a partial IPO of its shares has been scheduled for later this year. Initially, it is expected to roll out a network covering the country’s highways, as well as Abu Dhabi, Dubai and Al Ain, before moving to other areas. DIC Telecoms is part of the Dubai Technology and Media Free Zone (DTMFZ) authority, which is licensed under Dubai law to provide the infrastructure, buildings and management services within its business parks. It recently acquired the communications arm of Dubai-based property giant, Emaar in a deal which will see it providing phone and internet services to the company’s tenants. In August last year, Emirates Industrial Bank estimated that there are more than 4000 companies in the various free zones across the UAE. According to a report by Dubai Chamber of Commerce and Industry (DCCI), the free zones in Dubai generated more than Dh90 billion (US$24.5 billion) and recorded 28.5% growth in 2003. DIC Telecoms and the TRA declined to comment on the future of its monopoly.

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