BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Telecomunications sector of United Arab Emirates

The future of the UAE’s fixed-line market is expected to be one of continued slow growth, at odds with our earlier expectations that the sector would begin to flatten out, and eventually dip. Annual growth has remained fairly consistent over the past few years, with 2004 experiencing growth of 4.6%, followed by 2005 growth of 3.5% and 4% in 2006, taking the total fixed-line subscriber base to 1.28mn users. Our confidence that the market will continue growing derives from the ban on Voice over Internet Protocol (VoIP) services by the telecoms regulatory body, and until such a time when use of VoIP is allowed, customers will have little alternative than to use services as provided by Etisalat and du. This forms the Telecommunications Regulatory Authority’s (TRA) method of protecting its domestic companies and industry. Etisalat has sought to encourage usage in the international long distance (ILD) market by offering the corporate sector a 35% discount. We are now forecasting that fixed-line will grow at a consistent rate, in line with previous movements in the market, to achieve a penetration rate of 28.6% by the end of this year.

Further, the dominant operator is also seeking an aggressive strategy towards its broadband market position, with newcomer du currently trialling WiMAX. Etisalat set a precedent in the UAE with the announcement that it would reduce broadband tariffs – one of the highest in the region – and on a par with regional peers such as Bahrain’s Batelco. The operator is hoping that it will be able to make an early entry into the triple-play arena, with a well-established base across the mobile and fixed-line sectors, and ahead of newcomer du. To this end, it has also been pursuing a fibre-optic cable project, and recently added a new agreement to its existing portfolio with a US$400mn joint venture linking the Middle East, India and Western Europe.

Even as the operator branches out into the triple-play arena, it is well aware of the saturated nature the mobile market presents, leading it to pursue an international expansionist strategy. Two likely takeover candidates are Algérie Télécom, which is also the sole owner of mobile operator Algeria’s No.2 Mobilis and Kuwait’s Wataniya (it failed in its objective here). Having said that, Etisalat will need to be vigilant over its domestic market – newcomer du is more than likely set to take subscribers away from the market, given its 100% penetration rate, with MNP facilitating the move. The 31-year absence of an alternative service provider is more than likely to have made customers keen to try out a new provider, and unless it is able to provide a good level of service and high network quality, Etisalat could soon find itself permanently losing market share. To this end, Etisalat has sought to satisfy UAE customers, who are technologically more savvy than other users in the region given the modern technological infrastructure they enjoy, leading with the announcement this quarter that the migration to Next Generation Networks (NGN) had begun, with around 10% of its existing network to be NGN-ready by YE07.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - Business Environment Rankings

Middle East & Africa

UAE

Chapter 3 - SWOT Analysis

UAE Telecommunications Sector - SWOT

Chapter 4 - Industry Forecast Scenario

Fixed-Line

Table: UAE Telecoms Sector – Fixed-line - Historical Data & Forecasts

Internet

Table: UAE Telecoms Sector – Internet – Historical Data & Forecasts

Mobile

Table: UAE Telecoms Sector – Mobile – Historical Data & Forecasts

Chapter 5 - Macroeconomic Climate

Powerhouse Economy Drives On

Table: Economic Indicators

Chapter 6 - Country Snapshot: UAE Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Chapter 7 - Competitive Landscape

Market Structure

Competitor Analysis

Table: Key Players: UAE Telecoms Sector

Table: Etisalat Financial Indicators

Key Players

Fixed-Line

Table: Regional Fixed-Line Penetration Overview

Internet

Table: Regional Broadband Penetration Overview

Mobile

Table: Regional Mobile Penetration Overview

Market Data Analysis

Fixed-Line

Table: Etisalat Fixed-Line (mn)

Internet

Mobile

Table: Etisalat Subscriber Figures and Net Additions

3G

Industry Developments

Chapter 8 - Company Profiles

Regional Case Study – Huawei Technologies

Huawei Technologies – Contract Sales (US$bn)

Major Contract Wins For Huawei Technologies in MEA

Operators

Emirates Telecommunications Corporation (Etisalat)

Emirates Integrated Telecommunication Company (du)

Chapter 9 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Sources

Chapter 10 - Appendix: Regional Demographic Data

The Long View: Data Over The Economic Cycle (2000-2007)

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Middle East & Africa Telecommunications Reports: Sample of Companies Ranked

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Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of Middle Eastern and African Telecommunications Sources

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BMI's Middle Eastern and African Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include: