Gulf telecoms operators expected to profit wherever callers roam

Telecoms revenues are unlikely to be hit by move to slash mobile roaming charges by 30 per cent, analysts say.

Charges for the use of mobile phones while a customer is abroad represent a lucrative revenue stream for operators. Jeff Topping / The National

Gulf telecommunications operators are expected to maintain revenues despite being told to cut mobile roaming rates by 30 per cent.

Charges for the use of mobile phones while a customer is abroad represent a lucrative revenue stream for operators.

But a reduction in roaming fees within the GCC, the second since September, is likely to result in an increase of calls made from abroad, analysts say.

"The telephone companies will not necessarily suffer revenue decrease," said Philip Brazeau, who heads the telecoms practice at the Middle East law firm Al Tamimi. "If you reduce rates, the calling patterns increase."

Mr Brazeau said roaming charges in the Middle East were higher than those in Europe and North America. "They are a critical component of their long-distance revenue stream," he said.

Other analysts agreed that regional telecoms companies, such as the UAE's Etisalat and du, were unlikely to lose out because of the reduced charges.

"If they package it correctly, lower tariffs could encourage people to use [roaming] services more," said Matthew Reed, an analyst in Dubai with Informa Telecoms & Media.

Jawad Abbassi, the founder and general manager of the Arab Advisors Group, a regional consultancy, said many travellers avoided roaming fees by using a local SIM card.

"A minority of cellular users use roaming," he said. "My suggestion is to lower fees enough to encourage more people to use roaming."

The decision to lower tariffs applies to voice calls, but not mobile internet charges. Mr Reed said the "relatively high" cost of international data usage should also be addressed.

The decision to lower charges was made at a meeting of GCC telecommunications ministers at the Emirates Palace hotel in Abu Dhabi.

The ministers also set a deadline for analogue terrestrial TV signals to be switched off, said Mohamed Al Ghanim, the director general of the UAE's Telecommunications Regulatory Authority.

"There is a deadline which has been decided [of] the end of 2013 for all GCC countries to migrate from analogue to digital for television, except Oman which requested an extension to 2015," Mr Al Ghanim said.

"The outcome is going to be more channels provided to consumers. It's going to implement new technologies so you will have much more focused products for TV on the terrestrial side."

The ministers also agreed on frequencies to be used for the fourth-generation mobile network, and the band to be used for communications in the planned GCC rail project.