UAE mobile phone growth seen slowing in 2009

Al Mal Capital predicts population fall will hit demand for phones, no impact on web users.

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By  Soren Billing Published  March 31, 2009

Growth in the number of UAE mobile phone users will fall this year as the country’s population declines, Al Mal Capital said on Tuesday.

Analysts predicted the telecom sector would be hit by a 4.2 percent fall in the UAE’s population, followed by a 1.2 percent dip in 2010, the Dubai based investment bank said in a research note.

Its data showed that the average UAE resident currently has more than two mobile phones.

“While the UAE has been spared some of the worst excesses of the credit crisis, the country is, nonetheless, being impacted by the global downturn, in terms of lower oil prices, tourism and a cooling of the housing market,” analyst Irfan Ellam said.

Despite these challenges, Al Mal expects Etisalat’s full year revenue to rise 9.7 percent to AED28.6 billion ($7.8 billion), resulting in a 6.3 percent rise in EBITDA (earnings before interest, taxes, depreciation and amortisation) to AED18.4 billion ($5 billion).

The bank slashed its target price on rival operator du to AED2.84 from AED5.07 but maintained an outperform rating on the stock. du's full year revenue is expected to rise 24.2 percent to AED4.9 billion.

“We expect the du marketing machine to continue to work at full steam and offer compelling products and services to existing and potential subscribers through further segmentation of the market,” Irfan said.

Offering fixed line service outside the “New Dubai” area should provide the company with an additional boost, he added.

Al Mal does not expect the UAE's population decline to significantly impact growth in the number of internet subscribers, which is relatively low by international standards, but said that growth will be at a lower rate than in 2008.

The number of internet subscribers across all seven emirates is expected to increase by 22 percent to 1.47 million this year, giving an internet subscriber penetration rate of 27 percent.

Based on a population estimate of 5.02 million, mobile penetration in the UAE has exceeded 210 percent, or 2.1 mobile phones per person, but Irfan said that number could be misleading.

“Taking active mobile subscriber numbers into account reduces mobile penetration rates,” he said.

Al Mal has also revised its population estimate for the UAE upwards, to 5.6 million people by the end of 2008.

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