Dubai: Even though competition is taking place in the mobile phone tariffs among UAE telcos, it cannot continue for a long time nor can it go down indefinitely, an industry expert told Gulf News.
“It is a positive development in the market where we see the operators are responding to market needs and it shows that the competition is moving to the next level,” said Bhanu Chaddha, senior telecom analyst at IDC.
Etisalat has started its new tariffs to 11 countries for prepaid Wasel customers to make international calls at 0.4 fils per second, equivalent to 24 fils per minute and it is the lowest in the market. A call set-up fee of Dh1 per call will be applied at the beginning of the call.
Du had started a 0.5 fils per second for selected nine international countries with a set up fee of 50 fils per call and it is valid for three months.
Chaddha said mobile is an important aspect to their operations and expat population in these countries make a compelling proposition for the operators to make promotional offers. These promotional offers are obviously part of their strategy to continue to engage their customers, as it is creating value for the customers.
“If you look at the economics, at the end of the day, the value is created for the operators with the upfront charge. Everyone is moving towards primary SIM usage. Multi-SIM usage in the country is very high so you need to incentivise your customers to ensure that the particular SIM is a primary SIM. That is where the competition is coming into play,” said Chaddha.
The reduction in tariffs cannot go down “indefinitely” because it can affect the bottom line of the operators. Operators are also advised to not to get into a pure price war.
“In certain countries we have seen that price wars have not benefitted the telecom operators amid benefitting the customers. The telecom operators in the UAE still have room to improve their performances,” Chaddha said.
When asked whether the same competition will happen in the fixed network when TRA approves the network infrastructure sharing agreement, he said definitely competition will be there when the market opens up.
In the first phase, Chaddha said that internet protocol television (IPTV) is not included. When it opens up, price will be the key point.
According to Jonas Zelba, senior research analyst at Frost & Sullivan, infrastructure sharing will boost competition and lower retail prices in the UAE.
Zelba said that du is waiting for the TRA’s approval on network sharing to grow its fixed line subscribers and they are gearing up to be a strong competitor.
Fixed network sharing was initially planned to be enabled by the end of 2011 so that both etisalat and du can eye for each other’s market share. Both operators have marked their area of coverage so there is no real competition. Du primarily serves the newly developed areas and free zones in Dubai and etisalat serves the rest of the market and is by far the dominant operator.
IDC feels that true network sharing might still be anywhere between six to 12 months away in the UAE.