UAE telcos set to offer phone and internet deals

Market maturity likely to lead to price cuts, analysts predict

Tags: Emirates Integrated Telecommunications Company Etisalat International - UAEUnited Arab Emirates
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UAE telcos set to offer phone and internet deals Subscibers may pay less for phone and internet connections soon.
By  Elizabeth Broomhall Published  September 7, 2011

UAE telecom firms Etisalat and du are expected to reduce tariffs and launch a wave of special deals in the next 12 months as competition for the market share heats up, analysts have said.

The rival telco operators could introduce promotions for international calls, broadband deals and even special rates for user-groups such as students, as the pressure to attract new subscribers mounts.

"The market is getting more competitive is because it is becoming quite a mature market, and there are fewer opportunities for new subscriptions and growth," said Matthew Reed, a Dubai-based analyst from Informa Telecoms & Media.

"Operators are starting to offer better rates and so on, and be more imaginative about creating packages for certain types of user such as young people and students.

"They are also facing competition from the VoIP market [Skype]... so we are likely to see more offers on international calling."

Competition between the UAE's only two telecom firms intensified in the second quarter of this year when du won a 44% share of the market.

In a statement to Dubai bourse, the Arab state's second telco announced its profits before royalty rose 51% to $56.4m during the quarter, while revenues rose 28% to $591m.

The company said it also added a further 171,000 new mobile customers during the period, taking its subscriber count to approximately 4.7m active users.

Etisalat saw its net profit drop by 14.9% in the timeframe, missing analysts' forecasts.

However, the company said it had hit 7.5m mobile subscribers across the UAE by the end of the second quarter, up 0.9% on the previous quarter.

Heightening the competition in the next 12 months, analysts say, will be the introduction of mobile number portability, allowing users to migrate from one operator to another without changing their phone numbers.

The country's telecoms regulator (TRA) also said last month that business and residential customers would be able to choose between du and Etisalat for their fixed line and broadband services before the end of the year.

Both du and Etisalat already offer fixed-line and broadband services in the UAE, but not in the same districts.

Experts believe the measures, to be introduced soon, will keep downward pressure on pricing, whilst forcing the two companies to provide better and faster services.

"The trend has been for prices to fall," said Simon Simonian, a telecom's analyst with Shuaa Capital.

"I believe prices will continue to fall gradually, and I think once they open up the market, this will also step up the competition, whether that leads to lower prices, higher speeds or better services.

"They [Etisalat and du] want to improve affordability to encourage more adoption."

In a statement to Arabian Business, the TRA said it receives requests on a daily basis from Etisalat and du to reduce prices for telecommunications services in the UAE.

Since its inception the TRA has received close to 2,000 requests to reduce prices, over 90% of which have been are approved.

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