Business | Telecoms
UAE not to open up telecom sector to foreign firms
The UAE government has ruled out opening up the telecommunications sector to foreign players in the near future and expects tariffs to become competitive because etisalat no longer has monopoly on running phone and internet services.
- By Shakir Husain, Staff Reporter
- Published: 00:12 October 2, 2007
Dubai: The UAE government has ruled out opening up the telecommunications sector to foreign players in the near future and expects tariffs to become competitive because etisalat no longer has monopoly on running phone and internet services.
"So far we have not really looked at it, mainly because we feel the existing number of telecom companies is enough at present. In the future, this is something that we will leave to the needs and requirements of the market," Minister of Government Sector Development Sultan Bin Saeed Al Mansouri told Gulf News when asked about the government's plan on allowing foreign telecom firms in the local market.
He said the issues of demand and supply will determine who is in the market and "we do not want to affect the telecom sector in any way that could be negative in terms of the quality of service by creating more competition."
While the launch of services by the UAE's second operator Emirates Integrated Telecommunications Company, better known as du, in February has resulted in more choices for customers, tariffs have not come down as result of competition.
"You will see it eventually. As the other company (du) gains strength, definitely we will see more competition between the two sides. And the expectation is that the rates will be different than what we see now," Al Mansouri said.
Both du and etisalat have refrained from competing on price, while coming out with new service offers.
According to Wael Ziada, a telecom industry analyst at investment bank EFG Hermes in Cairo, the UAE market is well-served by the two operators at present.
"The UAE telecom market has one of the highest penetration rates in the region and still offers very good value to the current two players," he said.
The mobile phone penetration is put between 130 per cent and 160 per cent, while the rate of fixed lines is more than 30 per cent of population.
Ziada said tariffs have come down on value-added services but not on the services that constitute the bulk of consumer spending like mobile phones and international calls.
Any future decision by the UAE government to open up the sector to foreign competition would be a political one, Ziada said.
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