Tuesday, Jan 25, 2011
(This story was originally published Monday)
ABU DHABI (Zawya Dow Jones)--A top official of the United Arab Emirates' Telecommunications Regulatory Authority, or TRA, said Monday the Gulf Arab state's local market cannot handle a third operator, ruling out further liberalization of the telco sector, which is controlled by two majority state-owned telecom firms.
"The market can't take a third operator," Mohamed Nasser Al Ghanim, the watchdog's director general, said in Abu Dhabi Monday.
Two operators, Emirates Telecommunications Corp., or Etisalat, and Emirates Integrated Telecommunications Co., better known as Du, are operating in the U.A.E. Du launched its services in the country in 2007, breaking Etisalat's monopoly. The telcos compete country-wide in mobile services but not in the fixed-line business, which is restricted to specific areas in the country.
"We agree that the mobile market in the U.A.E. is already mature with a SIM penetration of 215%, the world's highest, indicating that each subscriber has at least two SIMs. There is no room for a third operator at all, especially that mobile tariffs are significantly lower when compared to other highly-penetrated markets," said Sarah Shabayek, a telecoms analyst at HC Securities.
A long-awaited infrastructure sharing agreement between the two U.A.E. telcos is now expected to be implemented this year, Al Ghanim said.
"We see infrastructure sharing by this year. We are hopeful by 2011," he said.
Du Chief Executive Officer Osman Sultan told Zawya Dow Jones that under the infrastructure sharing arrangement "we will be able to open up to the entire country."
"The announcement of the timeframe of the infrastructure sharing agreement is positive as it is expected to increase Du's fixed-line and broadband access to all U.A.E. customers and allow it to further enhance its top line," said Shabayek.
Du's shares closed up 5.3% at 3.18 U.A.E. dirhams ($0.87) after the news, while Etisalat's shares ended down 0.9% at AED10.60.
The TRA's latest initiatives are expected to lead to intensifying competition between Du and Etisalat as they seek to grab new fixed-line market share across the U.A.E.
Shabayek said infrastructure sharing will lead to more competition between Du and Etisalat, possibly leading to tariff reductions, and will result in reduced operating expenditure and capital expenditure on new infrastructure.
Mobile phone number portability between Etisalat and Du, which will allow customers migrating from one operator to another without changing their number, is expected to be available as early as in the first quarter, the TRA's Al Ghanim said.
"We will study it next week and we see it in the first quarter of 2011," he said.
-By Shereen El Gazzar, Dow Jones Newswires; +971 444 61684; Shereen.elgazzar@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
25-01-11 0343GMT
