14 May 2008
Dubai: Despite high penetration rates, the UAE and the rest of the Middle East still have a room for mobile virtual network operators (MVNOs), who stand to gain combined total annual revenue of $5 billion, according to industry experts.
Their entry is also expected to change the telecom landscape, beef up competition and eventually bring down the cost of mobile phone calls throughout the region.
Virtual operators are still being introduced in the Middle East and growing investor interest could likely put pressure on authorities to open up doors to competition, industry sources said.
MVNOs are companies that provide mobile phone services without owning a mobile network. They buy capacity or bulk time from an existing mobile network operator like etisalat or du on a wholesale basis, then package, add services and resell to customers under their own brand.
Atte Miettinen, chief strategy and business development officer of Friendi Mobile, clarified that there are currently no MVNOs in the UAE yet, but since virtual operators have already been introduced in Europe, North America, South America, Asia and Australia, MVNOs will reach the UAE "at some point".
"But this requires a decision from the Telecommunications Regulatory Authority (TRA), so the timing for the introduction of MVNOs in UAE will be decided by the TRA," Miettinen told Gulf News.
Dubai-based Friendi Mobile, which enjoys a multi-billion dollar backing from venture capital, is currently in negotiations in more than 12 countries across the region and is expected to announce its first MVNO service soon.
Hits Telecom, a Saudi-based company, has also announced similar plans once regulatory hurdles are cleared. In the meantime, it seeks to acquire an MVNO operation in Europe.
"The first country in the region to set up a legal framework for MVNOs was Jordan with Saudi Arabia's i2 announcing operations recently," said David Hirst, director of the Middle East Communications Exhibition and Conference, which will take place from May 26 to 28 at the Abu Dhabi National Exhibition Centre.
"Many in the industry are now waiting to see which of the Arabian Gulf countries - with their high mobile penetration rates - will take a lead and introduce this trend-setting business model," Hirst added.
In its report, Dubai-based advisory firm Delta Partners said the virtual mobile business in the Middle East looks promising, as its value could be close to $5 billion - a figure that is drawing a lot of investor interest.
There are more than 300 MVNOs worldwide, with some of them exceeding the number of licensed network operators.
By Cleofe Maceda
Gulf News 2008. All rights reserved.
