du challenges Etisalat with new business plan

Du has announced a new mobile payment plan targeting local business users, a direct challenge to Etisalat, the operator that currently dominates the local market. The offering includes two new plans, entitled the "Business Super Plan", that aims to attract the country's small-to-medium enterprise (SME) sector with rates as low as Dh1 per minute. The plans also include special deals on international roaming charges and unlimited BlackBerry offers.

Farid Fardooni, the executive vice president of du's commercial division, said the new plans were a continuation of the network's "premier" packages it launched earlier this year. "We all know that the SME's are the backbone of any economy. This is a segment which we don't really believe is addressed well here, from our point of view, and these plans are structured to address their needs," Mr Fardooni said.

Although official statistics vary, of the 260,000 businesses in the UAE, about 80 per cent of them are SMEs, according to the consultancy firm Ruwad Establishment, a division of the Sharjah Chamber of Commerce and Industry. In the basic plan, customers will pay Dh150 per month for 150 international minutes and 150 local minutes. After the monthly quotas are used up, customers will then pay Dh1.65 per minute for international calls and Dh0.30 per minute for local calls.

Although du does not compete directly on prices with Etisalat, the fact the new plans target the international segment is a savvy one, said Irfan Ellam, an analyst at Al Mal Capital. "We're in a unique market, so this is a much higher proporation of international traffic compared to other markets," Mr Ellam said. "International traffic is also very lucrative as well and charging for overseas calls in the market is a good revenue driver for the operators."

The offer would likely allow du to meet its target of 35 per cent of the UAE mobile market by the end of next year, Mr Ellam said. The network now has 2.9 million active subscribers, roughly 30 per cent of the market. In an indication that its lower-cost business model is proving to be attractive during the economic downturn, du reported 56,000 new subscribers in the second quarter of this year, while Etisalat lost more 80,000 users.

Said Irfan, the research manager for telecoms for the consultancy IDC Middle East, said the new offer was an "obvious plan" for du to capitalise quickly on the bad press Etisalat received last month after sending its BlackBerry users a software patch that later turned out to be "spyware". "It's clear that they want to turn over some of those BlackBerry subscribers from Etisalat as well as for some companies that are revisiting their corporate mobile plan because of the economic crisis," Mr Irfan said.

"I've heard of a few SME companies that have already been rethinking their mobile plans and something like this would definitely be attractive to them." Smartphone mobile subscribers, using devices such as Research In Motion's BlackBerry and Apple's iPhone, represent more than 60 per cent of the industry's total profit margin and is one of the few growth drivers as subscribers discard their old mobile phones for devices that can perform more robust multimedia and e-mail functions.

Although Etisalat is the only UAE operator to offer the iPhone, du is expected to offer the new iPhone 3G S sometime after Ramadan, which is likely to provide another boost to the network's profits. Mr Fardooni declined to comment on the company's upcoming iPhone plans. "The revenue generated by an iPhone user is five times that of a normal user. As Etisalat already has iPhone customers, it's a prime example of how they've made their revenue numbers. Although du will offer the iPhone with no existing [iPhone] customers, it will still make a difference for them," Mr Ellam said.