Doing What It Says

Let’s hope Du's press event secheduled for November 15 does in fact take place, and should it do so, that the announcement of significant progress is on the agenda.

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By  Tawanda Chihota Published  November 12, 2006

|~||~||~|Following the unexplained cancellation of a press briefing in September, du, the UAE’s second telecoms provider, has announced that it will be hosting a media event November 15, ahead of the region’s leading IT and telecoms exhibition GITEX, which commences November 18. The latest du event comes against a backdrop of negative speculation that the new player has faced problems in deploying its infrastructure, which has left it unable to publicise launch and service plans. Let’s hope the event on November 15 does in fact take place, and should it do so, that the announcement of significant progress is on the agenda. Du CEO Sultan Osman will preside over the event with speculation that he will announce the delivery of a shipment of SIM cards and an early December launch date for the mobile service. Unfortunately, it is likely that the hard work is only set to begin when du launches commercial services, not recede. It appears only fair to ask what du will actually represent to the domestic telecoms sector when it finally launches, and what it will mean for the thousands of retail investors who went out and bought du shares before a single dirham of service revenue was generated by the operator (not including revenues inherited from TECOM’s ongoing communications services offered in Dubai free zones, and which are now owned by du). Apart from racking up a bill of US$36 million in pre-operating costs for the six months to end-June 2006, much of it on salaries, du’s existence at this point in time has been very low-key, and one can only hope that closer to launch date, it will bounce back, capture people’s imagination, and make potential subscribers near and far aware of a viable business proposition. The thing is, after all the huffing and puffing that goes with the deployment of a state-of the-art integrated telecoms network, which offers mobile telephony services, fixed-line services, broadband access and cable television, what really is the point of du’s market entry? The cliché goes, ‘there’s no need to re-invent the wheel’, and in essence, it appears as if this is exactly the path that du is striding along with some gusto. For all its faults, Etisalat is a competent telecoms provider, which has achieved much in its 30-year history, a good proportion of that progress having come in the last 10 years or so. Mobile penetration in the UAE now exceeds over 100%, competing with the rates in some of the most sophisticated mobile markets in the world. The corporation claimed that internet and broadband penetration witnessed huge growth during 2005, with penetration standing at almost 51% at the end of that year, and the strong uptake is likely to continue, at least for the next few years. Fixed-line infrastructure is costly to build out from scratch, and in today’s world the appeal of developing a greenfield network is minimal, with most operators looking at intelligent internet protocol (IP)-style networks to offer a similar experience instead. Thus, Etisalat’s position as de facto fixed-line provider will remain unchallenged by du’s market entry, and the new entrant appears resigned to this fact given its early focus on the build-out of its mobile network, and the deferring of the launch of its fixed offering to an unspecified date in 2007. So what market does du have left to target? The UAE’s telecoms regulatory body, the TRA, denies that the issuance of the second integrated communications licence has anything to do with helping the UAE government score additional points in its ongoing negotiations to enter the World Trade Organisation. Believe what you may, but it is also a point that there is no pressing commercial or regulatory reason to usher in competition at this very point in time, particularly the variety of government-influenced, co-operative, and blunt competition du is likely to represent. ||**||

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