Business | Telecoms

UAE may witness commercial launch of fixed network sharing, MNP service this year

Telecom market is projected to generate $6.9b in revenue in 2012

  • By Naushad K. Cherrayil Staff Reporter
  • Published: 16:48 February 10, 2013
  • Gulf News

Dubai:

Consumers of fixed telephone line networks will soon get a bigger taste of competitive telecom lanscape in Dubai this year. That reality will happen as the country’s market becomes fully open for du and Etisalat, in what is called fixed network sharing. This has been deferred for almost two and-a-half years now, just as the introduction of Mobile Number Portability (MNP). which is also slated to begin. This could pretty well mark the most significant telecom event for the year in the UAE, according to industry experts.

“Expansion of addressable market with an opportunity to increase revenue share could result in a noticeable change in du’s operating business model,” Bhanu Chaddha, senior research analyst (telecommunications) at IDC, told Gulf News.

From the consumer point of view, fixed network sharing will offer them the choice of operator for fixed line voice and broadband services. The Telecoms Regulatory Authority (TRA) in the UAE had said that the network sharing service would be implemented by end of 2011, but both etisalat and du were technically not ready to launch the service.

Network sharing is likely to boost competition between the operators but, Chaddha said, absence of fixed number portability (FNP) could limit du’s intent even after commercial launch of fixed network sharing.

Pyramid Research’s latest report has put a rough worth for the UAE’s telecom market in 2012 of about $6.9 billion in service revenues. “A fixed network infrastructure-sharing deal between etisalat and du is expected to be completed this year,” Kerem Arsal, senior analyst at Pyramid Research, said.

He said that fixed circuit-switched voice will suffer, declining at an annual growth rate of 39.7 per cent over the next five years, although by 2017 we still expect this segment to generate $37 million revenue.

The developments in the fixed infrastructure will be a boon to broadband internet and return pay-TV services to growth, with these segments growing at annual rates of 7.5 per cent and 3.4 per cent, respectively, between 2012 and 2017.

“The development of local content will be a driving factor, as well. Similar to other maturing markets in the Middle East and Africa, mobile voice in the UAE will begin a slow decline, although the impact on revenue will be almost imperceptible during the forecast period,” Arsal said in the report.

2012 was indeed a very interesting year for UAE telecoms market. du continues to outperform Etisalat to clock double digit revenue growth, while at etisalat year-on-year revenues have marginally declined.

“While the commercial launch of network sharing agreements could breed ideal conditions for tariff rationalisation in the fixed line market, it would be interesting to watch whether or not operators restrain from adopting price point competition for a greater cause — safeguarding mutual financial health,” he said.

While the commercial launch of network sharing agreements could breed ideal conditions for tariff rationalisation in the fixed line market, it would be interesting to watch whether or not operators restrain from adopting price point competition for a greater cause — safeguarding mutual financial health.

As the UAE continues to make its transition from copper to a completely fibre-based, fixed-line infrastructure, dial-up internet service revenue will plummet, with the full disappearance of narrowband from the market anticipated in 2014.

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