UAE consumers able to choose between Etisalat and du internet this year

Du is expanding its retail network, including adding outlets in Abu Dhabi as it gears up to compete with Etisalat on home services. Sarah Dea / The National

Consumers anywhere in the UAE will be able to choose between du and Etisalat for home internet and landline services from this year, du’s chief executive confirmed.

The choice of operator for home services is restricted to where a consumer lives, but the UAE’s Telecommunications Regulatory Authority (TRA) has been working since 2009 to open this segment of the sector up. The process has been delayed for years – mainly because of technical challenges.

“You will see infrastructure sharing in phases,” said Osman Sultan, the chief executive. He said that the first phase would allow competition between du and Etisalat in fixed-voice and internet only. The second phase will expand to allow TV services to be provided.

Competition between the country’s two operators intensified from December 2013, when mobile users were allowed to switch between companies while retaining their phone number.

There were a significant number of complaints following the introduction of mobile number portability, with customers saying they could not migrate “swiftly” between the two operators.

The TRA is stepping up its oversight to ensure better customer service in the sector.

Du is expanding its retail network, including adding outlets in Abu Dhabi as it gears up to compete with Etisalat on home services.

“The UAE is becoming more competitive and both operators are looking at changing strategies to enhance experience and add more value to their delivered services,” said Paul Black, the director of telecoms at the adviser IDC Middle East, Turkey and Africa. “This will naturally eat away at profit. Couple this with an increase in royalties [the fee that both du and Etisalat pay to the UAE government].”

Du yesterday said that its fixed-line revenue grew 31 per cent last year compared to 2013.

Its fourth quarter net profit, after royalties, fell 10 per cent year-on-year, on a one time royalty adjustment of Dh124 million related to the final three months of 2013, du said.

The operator’s net profit for the period was Dh512.7m compared to Dh570.3m a year ago. Before royalty, du’s net profit rose 27.8 per cent during the period to Dh915.6m. Full-year net profit, after royalty, increased about 6 per cent to Dh2.1 billion compared to 2013, despite an increase in royalty of 55 per cent year-on-year.

“Net profit for du’s fourth quarter did fall quarter-on-quarter. Du attributed this to seasonal factors such as increased marketing costs and handset subsidies. And generally the new royalty regime is tougher on du than the previous one,” said Matthew Reed, the practice leader for the Middle East and Africa at Ovum.

But data continued to drive profit for du last year, with mobile users hungry for high-speed internet for live streaming, gaming and faster downloads.

Du’s mobile data revenue was up 18 per cent year-on-year to Dh2.79bn in 2014, accounting for about 30 per cent of its mobile revenue.

Du had 7.34 million mobile subscribers at the end of last year, up from 7.24 million subscribers at the end of 2013.

But despite the booming data growth, telecoms operators in the UAE have been facing pressure on the voice side of their businesses, as voice over internet protocol (VoIP) applications increase in popularity.

Viber, Skype and other programs are extremely popular among the UAE’s expatriate community, which has an impact on the operator’s bottom line.

“Du is likely to continue to experience pricing pressures from competitors and the popularity of VoIP services, a trend that the entire industry is facing in the future quarters,” du said in its earnings statement.

In terms of its future strategy, du said it was planning to diversify and to become more of an integrated communications player, focusing on growth from services related to government smart city initiatives.

Du is providing free Wi-Fi in popular locations across Dubai.

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