UAE a potential dream market for new GSM operators
The United Arab Emirates’ (UAE) total GSM and PSTN revenues are expected to grow from $1.6 billion in 2000 to more than $2.48 billion by yearend 2006, projects a newly released report from the Arab Advisors Group on the UAE communications market and Etisalat.
The UAE comfortably stands out as the Arab World’s most advanced communications market. While the partially privatized operator, Etisalat, remains the monopoly operator, the country’s penetration levels of services are quite impressive by all standards—32 percent PSTN (public switched telephone network) penetration, and 57.75 percent GSM (System
for Mobile Communications) penetration as of yearend 2001.
The report further asserts that despite reaching high penetration levels for communications services, the UAE market still has quite high Average Revenue Per User (ARPU) levels, which clearly shows that the UAE market has all the fundamentals to support a thriving competitive telecom landscape.
“The GSM market still has room for growth. The subscriber base grew rapidly at a CAGR (Compound Annual Growth Rate) of 66 percent between 1997 and 2000,” Said Hala Baqain, an Arab Advisors Group’s analyst. “Even at a quite high penetration rate of close to 58 percent, the monthly ARPU per GSM user in the UAE is an impressive $54. This qualifies as a dream ARPU for GSM operators in competitive countries with a similar penetration rate”, Baqain added.
The report shows that GSM revenues have contributed 41 percent of Etisalat’s total revenues in 2000. The Arab Advisors Group believes that the GSM revenues in the UAE will continue to grow at a much higher rate than fixed service revenues. Total PSTN revenues are projected to grow at a CAGR of only two percent between the years 2001 to 2006 to exceed $926 million in 2006.
In the meantime, GSM revenues are projected to exceed $1.5 billion by yearend 2006, constituting more than 62 percent of the combined GSM and PSTN revenues in the country. The Arab Advisors Group projects the PSTN market in the UAE to grow at a CAGR of five percent and to exceed 1.3 million lines in 2006, a penetration rate of 32.5 percent. GSM market, however, is projected to grow by a higher CAGR of 14 percent between 2001 and 2006 to reach close to 3.7 million subscribers by 2006.
These projections are grounded in the assumption that a second Mobile operator would enter the market to compete with Etisalat in 2003, an assumption that is very likely given the global trend towards liberalization and the UAE’s membership in the WTO (World Trade Organization). The report noted that any substantial liberalization in the UAE must be backed by a strong political will on the part of the Supreme Council of Rulers, the ultimate power broker in the country. Expectedly, market rumors of nearing Internet and GSM competition invariably include references to strong political backing. — (menareport.com)
© 2002 Mena Report (www.menareport.com)