Du breaks Etisalat’s iPhone hold

Du may have broken Etisalat's iPhone monopoly, but will it mean better service for users?

Tags: 3GApple IncorporatedEmirates Integrated Telecommunications Company Etisalat International - UAEHSPAUnited Arab Emirates
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By  George Bevir Published  October 28, 2009

Last month it was revealed that the UAE's second operator, Du, had broken Etisalat's exclusive arrangement to sell the iPhone in the UAE. When the iPhone first launched back in 2007, Apple entered into exclusive tie-ups with operators around the world, penning such a deal with the UAE incumbent. However, over the last couple of months Apple has moved away from the one-partner-per-market format as it looks to broaden the number of official channels distributing and supporting the device.

Consumers in the UAE welcomed the move, although it is still too early to compare the operators' pricing and tariffs and if past performance is anything to go by it is unlikely that a significant price war will break out. And it is even more unlikely that the cost of the device and tariff will compare favourably to markets in western Europe and the US.

With increased RAM, larger storage capacity (at the top-end of the range) and video recording, among other tweaks and improvements, it is not a particularly brave move to predict that the 3GS will be a popular device.

Because iPhones are geared towards easy access of the internet, through the large touchscreen and ease with which applications can be added, many networks that support the handsets have reported higher average revenue per user (ARPU) for iPhone users, bucking the global trend of declining average spend among customers.

While extra use of the internet can equate to more revenue, lots of people uploading photos to Facebook or downloading music while on the move can put a lot of strain on a network, requiring greater investment. Du's network has come in for a fair amount of stick in the past, and if it is about to start selling and supporting the iPhone its network will be given a very thorough going over. Du's 2G coverage stood at 94% of the population as of the end of last year, but it is still working on boosting 3G coverage, which will be essential if users of the 7.2Mbps HSPA-enabled 3GS are to harness the full power of the device.

At last week's Gitex conference in Dubai, Du CEO Osman Sultan reassured CommsMEA that Du's network is up to the job of supporting the device. He said that with one eye on mobile data consumption the operator had been gearing up to support devices like the iPhone, with capex devoted to improving the network he said the populated areas of the country are covered by HSPA.

Apple drives a notoriously hard bargain with telecom operators, with margins eaten into through subsidies and revenue share arrangements for data usage. Indeed, consultant John Strand claims that "there is not one single Apple partner in the world among the mobile operators that has increased their overall turnover, profit and market share due to the iPhone".

Although it may not have a significant impact on Du's balance sheet, stocking the most talked about handset will boost Du attempts to move into the high-end segment of the market, and it will build on the Elite tariffs launched earlier this year that signaled the operator's intent to capture a larger slice of the UAE's higher spending customers. And perhaps just as importantly, it has helped to focus efforts on improving Du's network.

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