Mobile handsets passing via Dubai surge

Mobile handset volumes passing through Dubai are estimated to have reached a "phenomenal" 400,000 plus units a month during the last three to four months, according to market sources. In comparison, monthly volumes were averaging around the 250,000-260,000 unit mark earlier. Volumes have shot up primarily on account of increasing demand from Saudi Arabia, Iran, Pakistan and South Africa, which are sourcing the handsets in bulk.

"There are no official statistics that we know to back this number. However, considering the fact that the UAE - and Dubai in particular - serves as the distribution point for some companies with region covered stretching from South East Asia to Africa and the Middle East, the number could be near the mark," said Asim Sukhera, the Gulf marketing manager for Siemens' communication devices.

In Saudi Arabia and Pakistan, import duty cuts have helped the local trade, numbering about 5,000 odd retailers, in GSM handsets. Mobile phone penetration in the kingdom, with a population of 18 million, is estimated at two million handsets.

As for Iran, the number is just one million out of a population base of 60 million. Syria is another market opening up to wider GSM services, and the Dubai trade is looking at it with some anticipation.

The total market within the GCC alone is between 2.5 to 3 million new units annually. Another factor that had a favourable impact is the erosion of some of the new model launches within weeks, or even days, of their availability.

A prominent launch of a particular handset in late June started off with a price tag of over Dh3,000 and has since slipped to Dh2,800. Other models, cutting across all brands, have also felt the pressure.

"This was largely a result of the global downturn in the mobile phones market. Major internationals had to move out inventory and in some cases, this resulted in their selling units at below cost price," said Sukhera.

The grey market operators are also seeing lucrative opportunities and have flooded the market with handsets, even those which are not compatible for use within the GSM network available here.

"The price difference between authorised distributors and grey market operators is not that high. The grey market, which should be accounting for around 60 per cent of the overall volumes, cannot discount beyond a point if they want to stay on in business," said D.P. Singh of National Information Telecom Appliance Co, a GSM consultancy.

"There is a myth going around, perpetuated by some, that Dubai's position as a GSM handset re-exporter is shrinking. That is far from the actual facts on the ground." Meanwhile, Etisalat's rate cuts on some of its mobile services, effective from next month, is expected to provide a substantial boost to the local replacement market, particularly on the entry and middle ranges.

"The replacement market in the UAE is today at the same size, if not larger than the market for new mobiles. If you take Etisalat's mobile subscriber base at 1.6 million, we would estimate around 30 per cent to form part of the replacement market," said Sukhera.