This year saw new UAE telecoms operator Emirates Integrated Telecommunications Company, branded as du, secure its customer base ahead of its expected launch of operations in February.
Du, which launched a campaign allowing customers to book their phone numbers with the company in November, has received approximately 500,000 subscribers booking 750,000 numbers. Under the campaign, customers are allowed to keep their old phone number but must change the prefix from ‘050’ to ‘055’. The ease of switching operators and the option for customers to retain their mobile number seems to have had a positive impact on du’s efforts to build a substantial customer base.
Etisalat and du square off
However, the imminent launch of du’s operations has led the existing operator, Etisalat, and the newcomer to adopt aggressive marketing strategies to showcase their new products, services and pricing. The mobile penetration rate in the country is extremely high, with estimates placing it at 125%—the highest mobile penetration rate in the Arab world. It also has internet penetration levels of 60%. Against such a backdrop, competition between du and Etisalat is set to be fierce.
Some analysts fear that this will not dramatically impact prices. Osman Sultan, CEO of du, said that the company will be looking to grab a 30% market share within three years of launching operations. However, this will not be achieved through a price war. According to Sultan, “We have a great deal of respect for Etisalat as a strong regional player with a very deep pocket. We will not be getting into a price war with them as such cut-throat competition would not be in the interest of either company.” However, Wisam Francis, BIS Shrapnel’s project manager for the Middle East telecom sector believes that du will struggle to achieve its ambitious targets, suggesting that it will only achieve between 10-20% market share up to 2009.
Du has been investing heavily in its infrastructure and human resources in preparation for the commencement of operations. The company has also been keen to make its mark ahead of the launch, highlighting its next-generation network and pricing structure. Particular areas of emphasis for both Etisalat and du are broadband and mobile television, both of which are expected to gain prominence in 2007. Du has also stressed its per second pricing strategy that distinguishes it from its competitor Etisalat. All customers will have the option to be charged on a second by second basis on all mobile voice calls. Sultan said that this was a particularly important development because, “It is only fair that our customers pay for precisely what they use.”
Etisalat is also preparing for the arrival of the new operator by readjusting its pricing structure. One key area that Etisalat is looking to address is international calls. The company is going to offer off-peak rates to business customers on their international calls, constituting a 35% discount on current rates. Ahmad Abdul Karim Julfar, the chief operating officer at Etisalat, seemed to concede that this decision was driven by the changing nature of the market in the UAE and recent developments. He argued, “In light of the current market environment we have reviewed our services and rates to ensure that the true cost of the service is more accurately reflected in the charges.”
VoIP still a controversial technology
However, it would appear that the rationale behind cutting prices on international calls is not simply driven by the imminent arrival of a new mobile operator in the UAE. Etisalat is also taking into account the potential changes to regulation on Voice over Internet Protocol (VoIP) in the emirates. This issue continues to dominate the telecommunications sector in the country. As it stands, the technology is still illegal with services such as Skype blocked in the UAE.
It has been rumored that the national regulatory body, the Telecommunications Regulatory Authority (TRA) is set to legalize VoIP. However, it has issued a rebuttal this week saying that the technology is still under review. The TRA’s manager for administration and public relations, Adnan al-Bahar told the local press, “Until the regulatory framework is in place VoIP is illegal.”
Nevertheless, it would appear that it is only a matter of time until the regulatory framework is put in place issuing in the legalization of VoIP. This is seen as a particularly important growth area in the telecommunications sector in the Middle East and North Africa region. According to Luke Kabamba, the Dubai-based ESM business unit head for IT software management company CA’s Europe Middle East and Africa eastern markets, The Middle East market has witnessed a huge surge in the last couple of years and many companies today have plans of investing in VoIP, which not only helps increase customer satisfaction and staff efficiency but also simplifies and reduces the cost of managing voice communication systems.
