Business | Telecoms

Third telecom operator in UAE ‘will strike right chord with consumers’

But TRA does not have any plans to license a third operator for the next few years

  • By Naushad K. Cherrayil; Staff Reporter
  • Published: 17:42 November 25, 2012
  • Gulf News

Dubai: The introduction of a third telecom operator in the UAE will strike the right chord with consumers and benefit the end users, as it would enable the normalisation of tariffs, industry experts said.

“Whether the market is big enough or not needs to be taken into consideration, however what I have seen is that whenever you have competition there is increased stimulus and we see growth in the industry, all the operators would benefit from that,” Ray Hassan, President of Ericsson GCC, told Gulf News.

Three is still not a large number and “I think the existing two do a very good job, nevertheless, wherever we have seen new operators being introduced, we have seen that the competition pushes the existing players to even better levels of performance and service,” he said.

Although a third telecom operator may not be warranted in the UAE at this stage, TRA had said that it does not have any intention to licence a third operator for the next couple of years besides the existing service providers — etisalat and du.

The UAE telecom market represents a classic case of a government-controlled duopoly.

Limited choice

Etisalat and du being the only telecom operators in the country leaves consumers with limited choice.

“High government ownership in both companies has probably restrained price competition in the market. This has resulted in service tariffs having remained relatively stable in the UAE. Both operators are focusing on packaging their offerings differently to stimulate service usage and provide a higher value to their users,” Bhanu Chaddha, senior research analyst (Telecommunications) at IDC, told Gulf News.

He said such a move could help TRA in its endeavours to stimulate competition.

“Introducing an additional operator to any market would be good. Then of course you’ll need to look at the balance between the market share and the type of service you want to provide and the geographic coverage but that’s a different story,” Hassan said.

Both operators have near universal mobile coverage and any new player coming into the market will find it difficult to compete on quality of service. They would need to bank on innovation and pricing to establish operations.

Chaddha said that both operators have resorted service bundling and sachet-based tariff models to stimulate usage and thereby earn higher revenue.

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