Greater competition, or at least the hope of more competition, took prominence in the UAE's telecoms sector in the first half of this year.
The Mubadala Development-owned satellite company Yahsat launched its commercial broadband service in the country, effectively becoming the third internet service provider in the UAE. Mubadala is an Abu Dhabi Government strategic investment company.
While most customers are unlikely to switch, for those who fall outside the coverage areas of du and Etisalat's fibre broadband coverage, Yahclick presents the opportunity to access high-speed internet.
Talk of network sharing of Etisalat and du's fibre-optic broadband infrastructure came to the fore once again with hints that it could become a reality by next year. The discussions, which began about four years ago, will enable consumers in the UAE to choose their fixed-line network provider rather than be limited to whichever company supplies their area or building.
Osman Sultan, du's chief executive, recently described the possibility of network sharing as a "game-changer". His company's mobile subscriber base grew 16 per cent in the second quarter of this year compared with the same period last year to 6.6 million. Its fixed-line customer base is substantially smaller, at just 580,000 across the UAE.
Once network sharing becomes a reality, du is likely to focus its effort on the domestic market rather than pursue international expansion through mobile virtual network operator (MVNO) licences as was initially planned this year before the company pulled out of bidding for an MVNO licence in Saudi Arabia.
Etisalat, on the other hand, has its sights set on international expansion once again. The operator is now in exclusive talks with the French conglomerate Vivendi for a 53 per cent stake in Maroc Telecom. The binding offer is valued at Dh18.8 billion, but the acquisition is subject to approval from the Moroccan government which has a 30 per cent stake in Maroc Telecom and the period of exclusivity will run until September 25.
Etisalat's Pakistan subsidiary PTCL is also eyeing up an acquisition of its competitor Warid Telecom in a deal that could potentially be worth US$1bn, according to Reuters.
Despite both operators recording growth in the first half of this year, with du announcing an exceptional Dh1bn dividend payout last month and Etisalat's UAE subscriber base rising 12 per cent to 9.9 million, overall domestic growth has slowed down.
"Both companies had a decent second quarter. Etisalat had a very good quarter, they have a new manager in their marketing and commercial unit who has sorted out pretty good offers, so they have had very strong first and second quarters this year," says Petr Molik, the chief financial officer at Menacorp.
"I think now both operators will continue to be challenged by the drop in average return per user [Arpu]."
According to the Telecoms Regulatory Authority (TRA), mobile penetration levels exceed 200 per cent in the UAE and with the rise of free messaging applications such as Whatsapp and WeChat and voice over internet protocol services such as Skype and Viber, traditional revenue streams are being dented resulting in lower Arpu for both operators.
Growth in data revenues however, is likely to continue but both operators will be under pressure to offset the loss in voice traditional revenues through other means.
Etisalat is looking to boost its international earnings while du is hoping to expand its data-centre business and explore opportunities in over-the-top services. It is set to announce a relaunch of Anayou.
The platform has been rebranded from open-content to one that involves collaboration with the region's other telecoms operators to offer localised services to customers in the region.
[ thamid@thenational.ae ]
