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Etisalat waives annual renewal fees for prepaid mobile service

Move expected to challenge rival du's dominance in client acquisition

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33 Gulf News

Dubai: For the first time since its formation 35 years ago, UAE mobile phone service provider etisalat will no longer demand annual service renewal fees from its subscribers.

Etisalat yesterday texted many of its 7.76 million mobile subscribers informing them that the waiving of the annual Wasel fee is a "special gift from etisalat on the occasion of Ramadan".

Effective August 1, mobile users with Wasel prepaid cards will enjoy what Etisalat calls "free lifetime validity."

The move eliminates the Dh50 yearly renewal fee for current Wasel phone card holders. New subscribers will still pay the Dh75 initiation fee.

Hasan Sandila, telecommunications analyst with IDC Middle East, Turkey and Africa, said the move will help etisalat remain competitive.

Strategic step

"This is surely a good news for etisalat's prepaid subscribers in the UAE as they do not have to pay the annual subscription charge anymore. In short, this announcement could be a strategic step to counter du's dominance in prepaid subscriber acquisition over the last couple of years," Sandila told Gulf News.

"Etisalat obviously becomes more attractive to consumers than it was before this announcement was made, because du still demands the annual renewal fee of Dh55.

"However, the key selling proposition of du's prepaid SIM cards is per second billing and hence consumers will weigh the costs and benefits based on their usage and then choose an operator rather than just considering the renewal costs," Sandila said.

The new strategy could bolster subscriber numbers as du witnesses a climb in new mobile customers .

Around 272,000 customers joined du in the first quarter of 2011 and revenues jumped by 29 per cent year-on-year to Dh2 billion from Dh1.5 billion in the first quarter of 2010.

"This step can indirectly be considered as a decline in etisalat's mobile tariffs, and could result in more prepaid subscribers for etisalat by virtue of inverse proportion," said Sandila. "This waiver of annual fees also provides etisalat with an opportunity to market their prepaid offerings in combination with their strong network coverage to further strengthen their market presence."

Strategic move

In a statement issued yesterday, Matthew Willsher, chief marketing officer at etisalat, said the latest move by the company will save customers money. "The free lifetime validity benefit helps customers maintain their Wasel connections for life, and saves them recurring costs."

New Wasel cards come with pre-installed lifetime validity.