Telecoms rivals face declining income

What's Down: As the UAE's rival telecommunications companies prepare to compete for each other's customers, the sector is facing falling revenues from their clients.

The country's telecommunications sector is facing falling revenues.

As the UAE's rival telecommunications companies prepare to compete for each other's customers, the sector is facing falling revenues from their clients, the research department at Al Ramz Securities said yesterday.

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"With an already oversold market and intensifying competition, especially with number portability expected by the third quarter this year between the two operators, overall mobile average revenue per user could stagnate at the very least and could possibly drop at worst," said Talal Toukan, the department's head.

The Telecommunications Regulatory Authority in July said Etisalat and du had completed talks to share their networks and new commercial operations would be launched in the coming months.

Under the agreement, both operators will be able to currently provide all fixed-line services, telephone and internet services, and in the near future television services, across the UAE.

Over the past three years, the growth in the number of fixed subscribers has slowed. Last year, total subscribers rose less than 5 per cent, a far cry from the double-digit growth enjoyed early in the decade.

The UAE has one of the highest mobile penetration rates in the world. As of June, the penetration rate was more than 146 per cent as consumers held multiple Sim cards, said Mr Toukan.

"Though subscriptions are expected to further increase - as population modestly rises and as technology advances enable consumer to move towards mobile internet - the same cannot be said for ARPUs [average revenue per user]," Mr Toukan said. "As with the case for fixed-line ARPUs, mobile ARPUs could be disrupted in favour of internet and data revenues."

Lower international roaming rates within the Gulf are also likely to affect earnings, said Mr Toukan.

The Arab Telecommunications and Information Council of Ministers in June last year formally adopted the position that GCC-based providers of mobile services should align their respective tariffs and reduce intra-GCC call charges. But the agreement has stalled.