Beruflich Dokumente
Kultur Dokumente
www.mtiworldwide.com
1
The Middle East telecom sector has experienced rapid hand, convergence with other sectors has brought about
changes and tremendous growth since 2003. Market opportunities that could be considered.
liberalization, increased competition, and the
introduction of new network technologies are all However greater availability of and demand for digital
increasing consumer demand for broadband access. In content, a growing youth market and the increase in
2006, most Middle East countries experienced double-
and even triple-digit growth in the number of broadband prosperity in the region are also significant drivers behind
subscribers. As a result, there are significant the observed boost in demand for broadband. This
opportunities for telecommunications operators to tap demand seems set for continued growth as more
into this potential and increase their revenues and bottom countries in the region move toward a competitive
line margins structure and as advancements in technology make it
more possible to provide high-speed broadband in an
economic manner. The success of regional
Exhibit 1 telecommunications operators in capturing this demand
World Internet users by World regions largely depend on key marketing, technology, and
3% 3% 1% customer service strategies and decisions that they will
Asia need to adopt.
Europe
10%
North America
40%
Latin America/Caribbean Growth strategies for telecom operators fall largely under
17% Africa two categories: Scale and Scope.
Middle East
Oceania/Austrlia The potential growth paths for telecom operators rely on
26% growing revenue share and growing the customer
base, and most preferably a mix of the two. In order to
grow, operators must be able to preempt competition and
The sector witnessed a phenomenal compound annual
leverage the critical mass for competitive advantage.
growth rate (CAGR) of 44 % between 2003 and 2007, with
subscribers increasing from 24 million to 103 million. As
the wave of sector liberalization continues, telecom In terms of scope and growing revenues, operators must
operators are facing increasing competitive pressure. On extend and diversify their business to include offerings
one hand, the market for traditional telephony, whether that go beyond basic telecom services. Seeking scope is
fixed or mobile, is so saturated that it can no longer be a further enabled by convergence between telecom and
viable exclusive source of growth. On the other other industries such as media and the financial sector.
Exhibit 2
World Internet penetration rate by Geographical Regions
North America
Oceania/Austrlia 59.5%
73.6% “ Telecom sector
has grown with
Europe 48.1% CAGR of 44 %
Latin America/Caribbean 24.1% between 2003 and
World Avg. 21.9% 2007, with
Middle East 21.3%
subscribers
Asia 15.3%
increasing from 24
Africa 5.3%
UAE has one of the most developed telecom market and Development of an independent regulator (TRA)
technologically advanced telecom infrastructure in the
Gulf with fixed, mobile and Internet penetration rates of In 2004, the UAE government created an entity, the
30.4%, 166.4% and 49.5% respectively at the end of Telecommunications Regulatory Authority (TRA), to
December 2006. The country is ranked first in the Arab
World and 29th overall in Networked Readiness Index regulate, develop and oversee the telecommunications
(NRI), according to the Global Information Technology industry in the UAE, effectively ending Etisalat's regulative
Report produced by the World Economic Forum. authority.
Until 2007, UAE‟s telecom sector had been provided The organizational objectives of the TRA are derived from
under monopoly conditions by the Emirates the Telecommunications Law. TRA is responsible for the
Telecommunications Corporation (Etisalat), a company of development of the required policies to maintain fair
which the UAE government owns 60%. Etisalat however competition, govern new entrants‟ ability to compete with
lost its monopoly in 2007 to Emirates Integrated the incumbent operator and manage the regulations
Telecommunication Company (EITC), now re-branded as related to the nature of the licensing regimes.
“du”. The company paid a total price of AED124.5 million
for the license that granted du the right to Install, operate
and manage all range of telecom services across the UAE.
Fixed-network markets have begun to be
In February 2007, du launched its mobile service across liberalized, albeit at a slower pace (see Exhibit 4).
the Emirates in addition to Internet and pay TV services in However, the region is starting to see stagnation in the
some of the free zones of Dubai. Call Select, the first of value added to market development by competing
du's nationwide fixed line services, was launched in July facilities-based operators.
2007. The introduction of the second telecom operator
will pave the way to a full liberalization of the market
Exhibit 3
Mobile Market Liberalization Time Line * Highlights of telecommunications regulation and liberalization**
Liberalization Exhibit 4
Telecom Competitive Landscape in Middle East
Until 2004, the UAE‟s telecommunications market had a
single entity, Emirates Telecommunications Corporation
(Etisalat), operating in the capacity of both a telecom
regulative body and a fully-fledged telecom service
provider, at the same time. With the UAE‟s accession to
the World Trade Organization (WTO) agreement, the UAE
initiated the first steps towards becoming a fully
liberalized market by 2015 (see Exhibit 3)
3
Exhibit 4
Mobile subscribers and Penetration rate Mobile affordability* (US$ per month, 2006)
166.4
8 180 24
7 160
127.6 20
140
6
per 100 inhabitants
Million Subscribers
110.5
US$ per month
120 16
5 94.7
80.6 100
7.59
4 69.4 12
6.94
57.6 80
3
5.52
45.4
4.96
60
4.53
8
4.01
3.68
2 40
2.97
2.43
1.43
1.91
1 4
20
0 0 0
2000 2001 2002 2003 2004 2005 2006 2007
The fixed line telephone system in the UAE was growing The introduction of CPS will increase competition in the
rapidly until the advent of cellular technology. A drastic UAE telecom sector, reduce prices, and enable consumers
decrease in prices for cellular technology in 1996 to freely choose their provider of national and
thwarted the growth of fixed line telephones. However, in international fixed line call services
terms of penetration rate, the UAE had the highest
penetration rate in the region, with rates exceeding 28% Pricing
at the end of 2006. Total fixed line subscribers in the UAE
According to the World Bank, the price basket for fixed
reached 1.38 million, with annual growth rates between
lines per month in 2006, showed that the UAE is among
4% and 5% per annum.
the most expensive in the region, in terms of
Exhibit 5
Fixed line subscribers and Penetration rate Fixed affordability* (US$ per month, 2006)
1600 34 20
32.4
1400 33
Subsribers in Thousands
31.7 16
per 100 inhabitants
1200 31.3 32
US$ per month
30.8
30.5 30.3 30.4
1000 30.1 31 12
800 30
1386
1310
1237
8
1188
1136
1094
600 29
1053
1020
400 28
4
200 27
0 26 0
2000 2001 2002 2003 2004 2005 2006 2007
Subcribers penetration
* Price basket* (US$ per month, 2006) based on monthly subscription Source: TRA
In terms of technology, the UAE has led the Middle East According to a study conducted by OpenNetIniative (ONI)
region through the introduction of the latest in February 2005, the UAE government, through Etisalat‟s
developments, and in infrastructure and service rollout. In internet service provider (ISP), (which at the time was the
1982, the UAE was the first country in the Middle East to country‟ sole ISP) blocked 15.4% of URLs, which are
introduce mobile phones and launch GSM services in otherwise accessible in other countries.
1994. In addition, the UAE was also the first in the region
to install 3G technology and offer a variety of related Pricing
multimedia and mobile services in 2003, a technology
The increase in retail competition is likely to impact
that is not available in the entire Middle East as yet.
prices, as operators try to bring more attractive offerings
Exhibit 6
Internet subscribers and Penetration rate Annual Cost of a Broadband Connection, 2007
600 25 $1,200
$995
500 20 $1,000
Thousand Subscribers
$793
400 $800
15 $627 $659
300 $600 $514 $557
524
10
443
$324
399
$400
380
200
363
$255
317
290
256
241
5
209
100 $200
128
18
30
56
0
0 0 $0
2000 2001 2002 2003 2004 2005 2006 2007
Enabling Network Technologies The Voice over IP (VoIP) Services has many regulatory
As the amount of data transfer increased the requirement aspects in UAE. Only the Licensees (Etisalat and DU) can
of bandwidth also increased. Because content requires so provide VoIP Services to the users in the UAE.
much bandwidth, the limited availability of enabling
technologies has traditionally been the main obstacle for
the mass usage of content services. This is becoming less VoIP allowed only for local calls
of an obstacle in relatively advanced markets, such as The Telecommunications Regulatory Authority (TRA) said
those of the GCC. Fixed and mobile broadband in November 2006 that it would allow Voice over Internet
Exhibit 7
3G Penetration evaluation Broadband Penetration evaluation
3.5% 10.0%
3.0%
3.0% 7.9%
2.6% 8.0%
2.5%
% of Population
% of Population
2.0% 5.8%
2.0% 6.0% 4.9%
1.7% 1.6% 4.6%
1.5% 4.5%
1.4%
1.5% 4.0%
1.1% 1.0%
0.8% 2.6%
1.0% 1.9%
2.0% 1.0% 0.9%
0.5% 0.6%
0.0% 0.0%
Bahrain Kuwait Oman Saudi Arabia UAE Bahrain Kuwait Oman Saudi Arabia UAE
2006-07 2006-07
81% 95% 94% 66% 101% 26% 87% 80% 120% 71%
Growth Growth
technologies are becoming increasingly accessible with Protocol (VoIP) technology, but only for local calls within
the phenomenal growth levels witnessed in the adoption the UAE. Long-distance calls using VoIP will continue to
of 3G and DSL services in the region. be prohibited, for the time being, to protect the
revenue, which telecom operators receive from
UAE was also the first in the region to install 3G international calls.
technology and offer a variety of related multimedia and
mobile services in 2003, a technology that is not available
in the entire Middle East region as yet. The following VoIP communications are considered
illegal:
Telecom-media convergence
Mobile handsets are increasingly converging with other • Any call initiated from a PC and terminated at a
multimedia devices, such as digital cameras, music and Landline (in the UAE or everywhere) and/or Mobile
video players, and personal digital assistants (PDAs). such as MSN Credit, Skype-Out, etc.
Similarly, customer premises equipment (CPE) for fixed • The use of IP Handsets through Internet Access to
telephony is converging with personal computers and
television set-top boxes. A number of set-top box vendors make national and international calls such as
are becoming increasingly active in this space and Net2Phone, etc.
manufacturers are driving rapid product development and • The use of websites that act as a trigger in initiating
increased innovation. Among the advanced features calls such as jajah, etc.
integrated into this new generation of equipment are high • The use of VoIP Gateways and use of VoIP Services in
storage capacity, video-on-demand capabilities, digital
video recording support, multiple format connecting the Office in the UAE to an office outside
decoding, security support and digital rights the UAE boundaries.
management.
7
Given the dynamics of technological innovation and The opportunities available in the UAE`s Information and
development in the communications industry, multimedia Communications Technology (ICT) industry are growing
convergence, mobile broadband and internet usage are quickly. The value of the local market is expected to
set to be the next battleground for operators. Although reach $2.4 billion by 2011 from $1.5 billion in 2006. The
voice communication will remain the major revenue country is expected to become the region`s premier ICT
generator for mobile operations in the medium term, data hub due to its heavy investments, which are aimed at
and value-added services will play an important role in boosting the technological potential of the country and
differentiating operators and increasing the loyalty of the benefits of Dubai Internet City, Dubai Media City and
subscribers.
Exhibit 8
Mobile telecom operators are moving towards
ICT market by 2010
convergence of services offering either trip-play or quad-
play for a number of reasons:
$3.80
$4.00
$2.00
• Increasing revenue sources
$0.88
$1.00
$0.40 $0.40 $0.38
Consumer attitudes and behavior, particularly those of
teenagers and young adults, regarding communication $0.00
services has significantly changed over the past decade.
Saudi UAE Kuwait Qatar Oman Bahrain
Evidence of this transformation can be seen in the
Arabia
growing popularity of online chatting, online social
networking applications (e.g. Facebook, Hi Five), peer-to- its free trade zones. Several major initiatives coupled with
peer file sharing and even online trading, all of which will regional trade and economic liberalization are expected
drive up the adoption of next-generation network to boost IT growth in the UAE. IT in particular has become
services. a driving sector for growth in the UAE. The regional hub
is leading the adoption and development of new
technologies. Worldwide interoperability for microwave
Growth drivers for broadband access technology will give rise to more powerful and
efficient notebooks, media internet devices and ultra-
• Greater demand for digital content applications (e.g. mobile personal computers due to the reduced power of
online stock trading, Facebook, Youtube, Itunes, etc…) consumption by 95 per cent
• Growing young population
• Increasing regional wealth
• Low broadband penetration
• Decreasing monthly access costs
• Network technology advancements
8
Exhibit 9
Total Telecom market projection Mobile versus fixed line penetration
184 182 184
12.0 200 32
166.4
9.6 180 31.5
10.0 160
7.8 127.6 30.4 30.4 31
8.0
7.4 140 110.5 30.3 30.2
30.1 30.1 30.5
5.9 120
USD bn
6.0 100 30
80 29.5
4.0 60
29
40
2.0 20 28.5
0.0 0 28
2007 2008e 2009e 2012e 2005a 2006a 2007a 2008e 2009e 2010e
Mobile penetration (LH) Fixed penetration (RH)
Source : Al Mal Capital
Continued room for mobile subscriber growth restriction and the usage of Voice over Internet Protocol
(VoIP). According to a study conducted by OpenNet
Strong mobile subscriber growth will be triggered by the Initiative, almost 15.4% of the total number of websites it
UAE‟s rapidly growing population and increased inflow of tested were blocked in the UAE, leading to a conclusion
expatriates, which, in turn, means high demand for that the UAE suffers from over-blocking, thus preventing its
international telecommunication services.
citizens from accessing a considerable amount of material unrelated
Given „inflated‟ subscriber numbers, it is believed that to the UAE's expressed goals.
there is room for increases in the level of active
subscribers. The TRA has maintained its position to ban VoIP services
in the UAE, allowing it only through the licensed telecom
Fixed line revenue lagging behind operators. The endorsement of VoIP will promote
Revenues from the fixed line operations to continue broadband penetration, especially given that a significant
dropping. Telecommunications Regulatory Authority 78% of the total population in the UAE are
(TRA) has directed Etisalat and Du, the only two telecom expatriates, who could use the inexpensive voice over
operators in the country, to make network adaptations in internet applications to make international calls.
order to provide CPS in the fixed line telephone by 2009. However, the flipside to the endorsement of VoIP would
CPS allows telephone users to have their calls be the decrease of international call revenues for telecom
automatically routed through a network offering lower operators.
call cost, without the need to dial a prefix or use special
equipment.
Subscribers ('000)
10,000
Penetration
140 35
2000
Penetration
120
1,953
8,000 30
1,503
11,902
11,384 100 1500 25
10,784
10,024
1,130
6,000 80
9,231
20
819
7,694
60 1000
569
4,000 15
5,519
524 380
4,534
3,683
40
442 243
10
398129
2,000 500
694
36355
673
648
617
576
20 5
0 0 0 0
2004a 2005a 2006a 2007a 2008e 2009e 2010e 2011e 2012e 2004a 2005a 2006a 2007a 2008e 2009e 2010e 2011e 2012e
1,400 29
1,200
Penetration
28
1,899
1,826
1,000
1,739
1,626
1,505
27
1,386
800
1,310
1,237
1,188
600 26
400
25
200
0 24
2004a 2005a 2006a 2007a 2008e 2009e 2010e 2011e 2012e
Exhibit 9
Etisalat’s UAE mobile Etisalat’s UAE fixed-line
1.79
96%
1.56
7.9
1.45
7.22
0.86
0.85
0.84
0.83
4.02
92%
3.82
3.80
3.69
2 20% 0.4
0 0% 0 88%
2007 2008 2009 2012 2007 2008 2009 2012
Subscribers (mn) Revenue ($ bn) Market Share Subscribers (mn) Revenue ($ bn) Market Share
3.00 120%
Etisalat is currently majority-owned by the
2.50 100% UAE Ministry of Finance (60%); the 40% free-
float is publicly traded on the Abu Dhabi
2.00 80%
Exchange (ADX) and can only be held by
1.50 60% UAE nationals
2.57
1.00 40%
1.39
1.11
0.88
0.40
0.48
0.58
0.78
0.50 20%
0.00 0%
2007 2008 2009 2012
Subscribers (mn) Revenue ($ bn) Market Share
Source: UAE TRA, Al Mal Capital Research
Operations
Etisalat‟s integrated service license from the UAE In 2006, Etisalat restructured its operations into three
Telecommunications Regulatory Authority (TRA) remains independent units:
valid until 2025, with the option to renew thereafter. In Etisalat UAE provides full mobile and fixed-line
February 2006, the TRA ended Etisalat‟s domestic telecom, internet cable TV services (through e-Vision) and
telecom monopoly when it granted the UAE‟s second network data services within the UAE.
integrated service telecom license to the newly formed Etisalat Services handles all operations, customer service
Emirates Integrated Telecommunications Company and educationalpromotions of Etisalat‟s ancillary units
(EITC), operating under the brand name du. like Emirates Data Clearing House, Ebtikar,e-Facilities
Management, e-Real Estate, e-Academy, and e-Marine.
11
Exhibit 9
DU’s UAE mobile DU’s UAE fixed-line
0.47
0.2
4.05
2 0.2 0.03
0.32
0.15
0.28
2.81
0.046
0.057
0.114
0.02
2.03
1.93
0.1
1.46
0.69
1.18
0.07
1 0.1 0.01
0.05
0 0 0 0
2007 2008 2009 2012 2007 2008 2009 2012
Subscribers (mn) Revenue ($ bn) Market Share
Subscribers (mn) Revenue ($ bn) Market Share
Source: UAE TRA, Al Mal Capital Research
About MTI
Contact us
SRI LANKA
Global Head Office – BAHRAIN
MTI Consulting (Private) Limited
MTI Consulting
Taj Samudra Office Complex
Suite L6, 2nd Floor, Phase II, Yateem Center
25, Galle Face Center Road
Manama, Kingdom of Bahrain
Colombo 03, Sri Lanka
Tel: (973) 1722 9242
Tel: (94) 11 2543 700 / 2543 777
Mob: (973) 3933 7964
Email: srilanka@mtiworldwide.com
Email: middleeast@mtiworldwide.com
UNITED KINGDOM
Global presence
MTI Consulting Ltd.
41, Charlton Street Associates
INDIA London NW1 1/D
DX 2103 EUSTON
United Kingdom • UK
MTI Business Consulting (India) Pvt Ltd
Tel: (44) 0870 7607538 • CZECH REPUBLIC
S 306A, Manipal Center, Dickenson Road
Email: uk@mtiworldwide.com • UKRAINE
Bangalore 560 042, India
• TURKEY
Tel: (91) 80 4115 9050 / 1
BANGLADESH • BRAZIL
Email: india@mtiworldwide.com
• KOREA
• BELGIUM
MTI Consulting (Bangladesh) Ltd.
UNITED ARAB EMIRATES • GERMANY
Dhaka Sheraton Hotel
• AUSTRALIA
BSL Office Complex, Building 1, 3rd Floor
MTI Consulting 1 Minto Road, Ramna
# 38, Block 18, 3rd Floor Dhaka 1000
Dubai Knowledge Village Tel: (88) 02 8830 103
P.O. Box 502221 Email: bangladesh@mtiworldwide.com
Dubai, UAE
Tel: (971) 4 3658 486
Email: uae@mtiworldwide.com
PAKISTAN Business Partners
MALAYSIA
MTI Consulting Pakistan (Pvt) Ltd • MALTA
MTI Consulting (Malaysia) Sdn. Berhad Karachi Marriot - Business Arcade • ZIMBABWE
Level 36, Menara Citibank 9 Abdullah Haroon Road • SWAZILAND
165, Jalan Ampang GPO Box 1044 • INDONESIA
50450, Kuala Lumpur, Malaysia Karachi, Pakistan
Email: malaysia@mtiworldwide.com Tel: (92) 21 5693503
Email: pakistan@mtiworldwide.com