The UAE Telecommunications Regulatory Authority yesterday approved the establishment of a new telecommunications company, according to WAM.
The move effectively ends Etisalat's monopoly.
The authority's resolution to grant a licence to the new Dh4 billion telecom provider follows a federal government intention to set up a new company in which the General Pensions and Social Security Authority and other private sector shareholders hold a 40 per cent stake.
Remaining stakes will be earmarked for private sector shareholders including a public offering component.
News that the UAE will get a new telecommunications company was widely welcomed yesterday, with industry captains expecting the move to yield better services at more competitive rates.
"The UAE Government's objective in forming this company is to offer another option for telecom users and customers as the company is licenced to provide all telecom services," said Mohammad Khalfan Bin Kharbash, Minister of State for Financial and Industrial Affairs and Chairman of the authority.
"This intiative constitutes the first step in the liberalisation of the sector."
Abdul Rahman Nasser Al Owais, chairman of the regulatory agency, said: "The new company will help keep the UAE at the forefront in this sector."
Mohammad Omran, chief executive of Etisalat, remained non-commital about the implications of a second telecom operator: "I am not sure how it will function. We should await more details."
Stock market circles felt the company would be based in Dubai with operations throughout the UAE.
"It will be modelled along the lines of Etisalat," a regulatory agency spokesman said.
Salem Al Shair, director of e-services for the Dubai e-Government, said: "Etisalat has already benchmarked telecom services at a high level.
"With more members of the community increasingly accessing e-government services, the entry of one more player will help drive this migration faster," he said.
Stock market analyst Walid Shihabi of investment company Shuaa Capital said the move was widely anticipated, and comes in line with telecom deregulation throughout the Gulf.
Bahrain, Kuwait, Oman and Saudi Arabia have already permitted new players into their telecommunications sectors.
Veteran stockbroker Zuhair Jobran Al Kiswani noted the breaking of Etisalat's monopoly could lead to a wave of panic-selling in the short term.
"At around Dh40, the share is not cheap, and could well lose ground as a knee-jerk reaction today," he predicted.
A section of the market also observed the second UAE telecom licence is being awarded directly, without having been put through a competitive bidding process.
