Population growth to push UAE telecom expansion

Dubai: A steady growth in population of nationals and expatriates in the UAE will bring Dh35.27 billion revenue to the the telecom industry by 2012, report says.

Al Mal Capital Research analysts predict the UAE population to grow at 4.8 per cent, taking the current population of 4.6 million to 6.3 million in 2012.

Led by population growth, the overall UAE telecom industry's revenues is forecast to grow at 8.5 per cent, expanding the market revenue from Dh21.6 billion to Dh35.27 billion by 2012.

The overall telecom industry will significantly boost the mobile market that, as end of 2007, reports a subscriber total of 7.7 million.

In 2008, the number of active SIM cards will surge to 9.2 million, and continue the acceleration to reach 11.9 million subscribers in 2012, according to market research.

etisalat recorded its mobile customers at 6.83 million, an increase of seven per cent compared to end of 2007, and stated net revenues of Dh6.383 million in the second quarter of this year.

Recently, the telecom operator launched mobile numbers with the prefix of 056, which currently has 15,000 subscribers according to sources.

In the first quarter of 2008, du's mobile customers reached 1.7 million but with 1.4 million active customers (a number from which a call was made or SMS/MMS was sent or a call was received in the last 90 days as per Telecom Regulatory Authority [TRA] regulations), according to company reports.

Revenues

The telecom operator's total revenues at end of March were reported to be Dh756.5 million, at an 18 per cent increase from the previous quarter.

Mobile penetration rates are expected to grow slightly from 166 per cent in 2007 to 188 per cent by 2012, according to reports.

However, experts believe that mobile penetration will be inflated due to certain factors. Business visitors are inclined to use a local SIM card and the high level of tourism translates to an increase in mobile users as they buy SIM cards for the duration of their stay.

Researchers also believe attractive offers by du is an incentive for many to open a du account as a trial, while still maintaining their etisalat account.

etisalat is said to have an 80 per cent share in the UAE mobile market, but it could see a 10 per cent decrease in local market as du is targeting a 30 per cent market share by 2010, according to Al Mal Capital Research.

"While etisalat should inevitably see its domestic market share decrease, the company's growth and profitability should be driven by its rapidly expanding overseas operations," said Irfan Ellam, equity research analyst at Al Mal Capital Research.

etisalat is "aggressively expanding international operations" in 15 countries and 36 million proportionate subscribers.

"Once du completes its mobile network rollout, we expect genuine increased competition within the UAE between the two players, although it will be based less on direct price competition and more on special offers and promotions," Ellam said.

The overall Middle East telecom markets are reaching saturation levels, according to a study by Booz and Company.

The sector witnesses a compound annual growth rate of 44 per cent between 2003 and 2007, with subscribers increasing from 24 million to 103 million.

More operators are coming into the markets, while others are expanding geographically.

Gassan Hasbani, vice-president, Booz & Company said, "Going forward, high growth levels will become increasingly difficult to sustain by relying only on traditional expansion. So, cross border consolidation is expected to become increasingly common in the region."

Fact file

etisalat
050 mobile prefix: 6.82 million subscribers
056 mobile prefix: 15,000 subscribers

du
055 mobile prefix: 1.4 million active subscribers