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Etisalat to charge customers by the second

UAE incumbent braces itself for impending competition

Etisalat CEO Mohammed Al Qamzi announced that the incumbent operator would adopt per second billing in the near future in order to reduce rates for subscribers. The announcement, which did not state when the scheme would come into effect, arrives less than a month after the UAE’s nascent second operator du declared it would also charge subscribers by the second on launch of mobile operations.

Etisalat’s latest move confirms industry analysts’ assumptions that the incumbent will counter du’s market strategy over the coming months in order to render its differentiation efforts ineffective.

“I think as soon as we know more about du’s packages Etisalat will launch something similar. I think Etisalat will look at the market strategy of du and try to imitate aspects of it. Segmentation will happen and I expect Etisalat to offer the same kind of packages very soon after du launches,” said Marc Hammoud, assistant vice president of research, Shuaa Captial.

Etisalat already announced plans to reduce its international call rates by 35% for business customers in anticipation of the impending liberalisation of the UAE’s telecommunications market but the UAE’s Telecommunications Regulatory Authority have made it clear that the market will not be subjected to a price-war.

The telco made significant reductions to its broadband packages, providing free installation and a one-month fee waiver for its Al-Shamil broadband customers, which, according to Etisalat, has attracted 12,000 new broadband subscribers over the last three months.

It is expected that Etisalat will be hit by du's entry into the market, though it may also reduce the amount the telco has to pay the federal government.