# Etisalat gets competitor



## Krazy (Apr 27, 2004)

*Etisalat gets competitor*

Abu Dhabi: The UAE Telecommunications Regulatory Authority yesterday approved the establishment of a new telecommunications company, according to WAM.

The move effectively ends Etisalat's monopoly.

The authority's resolution to grant a licence to the new Dh4 billion telecom provider follows a federal government intention to set up a new company in which the General Pensions and Social Security Authority and other private sector shareholders hold a 40 per cent stake.

Remaining stakes will be earmarked for private sector shareholders including a public offering component.

News that the UAE will get a new telecommunications company was widely welcomed yesterday, with industry captains expecting the move to yield better services at more competitive rates.

"The UAE Government's objective in forming this company is to offer another option for telecom users and customers as the company is licenced to provide all telecom services," said Mohammad Khalfan Bin Kharbash, Minister of State for Financial and Industrial Affairs and Chairman of the authority.

"This intiative constitutes the first step in the liberalisation of the sector."

Abdul Rahman Nasser Al Owais, chairman of the regulatory agency, said: "The new company will help keep the UAE at the forefront in this sector."

Mohammad Omran, chief executive of Etisalat, remained non-commital about the implications of a second telecom operator: "I am not sure how it will function. We should await more details."

Stock market circles felt the company would be based in Dubai with operations throughout the UAE.

"It will be modelled along the lines of Etisalat," a regulatory agency spokesman said.

Salem Al Shair, director of e-services for the Dubai e-Government, said: "Etisalat has already benchmarked telecom services at a high level.

"With more members of the community increasingly accessing e-government services, the entry of one more player will help drive this migration faster," he said.

Stock market analyst Walid Shihabi of investment company Shuaa Capital said the move was widely anticipated, and comes in line with telecom deregulation throughout the Gulf.

Bahrain, Kuwait, Oman and Saudi Arabia have already permitted new players into their telecommunications sectors.

Veteran stockbroker Zuhair Jobran Al Kiswani noted the breaking of Etisalat's monopoly could lead to a wave of panic-selling in the short term.

"At around Dh40, the share is not cheap, and could well lose ground as a knee-jerk reaction today," he predicted.

A section of the market also observed the second UAE telecom licence is being awarded directly, without having been put through a competitive bidding process.


----------



## ragga (Jan 23, 2005)

Finally!!!! Hopefully my clients can get better reception in the Springs now.. i wonder what the plans will be..


----------



## Bahraini Spirit (Dec 14, 2002)

Ya about time really, only Qatar left. Kuwait has a few companies, Bahrain has 2 mobile companies, a few Internet companies are comin in, 2 companies besides Batelco for landlines (first country to break landline monopoly in the mid east), first company up and running by the end of the year (light speed communications) and more on the way.



> A section of the market also observed the second UAE telecom licence is being awarded directly, without having been put through a competitive bidding process.


This isn't good, were is the transparency and competition. Build on this good move and open it to all players.

Good to see the UAE decided to open up.


----------



## Bahraini Spirit (Dec 14, 2002)

The UAE has approved a new Dh4-billion ($1.1 billion) telecom service provider to end a sector monopoly in the country, state news agency Wam reported. 

It said the Telecommunications Regulatory Authority agreed to license the new company, which will be partly owned by a state pension fund, private investors and public shareholders. 

A portion of the company, which the agency did not name, will be sold in an initial public offering. 

The move would end the monopoly of Emirates Telecommunications Company (Etisalat) , which is 60-per cent owned by the UAE government, with the rest held by UAE nationals. 

'This initiative constitutes the first step in the liberalisation of the sector,' the agency quoted Mohammed Khalfan bin Kharbash, minister of state for finance and industry, as saying. 

'We will create the fertile ground and environment for all telecom companies to achieve their aspired goals in the short and long term,' said Kharbash, who heads the authority. 

Regulators will announce in the coming months a timetable for launching and operating the company, Wam said. 

The UAE, a federation of seven emirates, has a population of 4 million, mostly expatriates, with a high penetration rate for telecom and Internet services.


----------



## DarkBlueBoss (Mar 3, 2005)

http://skyscrapercity.com/showthread.php?t=209157
earlier Today


----------



## mc (Jul 30, 2004)

if any of you guys living in Dubai will have any info as to when this new Etisalat competitor with go IPO n the market - plse let us know. it will very much be apprectd. ty


----------



## DarkBlueBoss (Mar 3, 2005)

*Etisalat shares plunge by ten pc*

Shares in telecoms operator Etisalat fell sharply after the UAE announced that it had awarded a licence to a second operator, effectively ending the monopoly of Etisalat. Its shares closed at dsh35.30, down by dhs3.90, or nearly ten per cent on the Abu Dhabi Securities Market, as investors decided to dump the stock. “The stock is likely to witness some more correction in coming days,” said a Dubai-based broker, who declined to be identified. “The stock was highly over-valued.” He said he would not recommend buying the stock at current prices, since it was still over-priced. “It needs to go down further,” the broker said.










He however, did not think the news of a new operator would have an immedidate impact on Etisalat’s operations. “Etisalat has an overwhelming share of more than 90 per cent in both mobile and landline penetration. Coupled with its excellent infrastructure, it will be difficult for any newcomer to pose a challenge.” 


To its credit, anticipating its loss of monopoly control in the UAE market, Etisalat has been eyeing other growth markets. In conjunction with other investors, Etisalat won the right to operate mobile phone services in Saudi Arabia, besides winning the country’s first 3G licence. More recently, it acquired a 50 per cent stake in West African operator Atlantique Telecom. 


“I’m not sure about the wisdom of its African investments,” said the broker. “They can be high-risk bets. Yet, overall, I think the company should have no problem growing by around 20 per cent a year. After all, it remains the market leader.” Etisalat’s profit jumped by 19 per cent to dhs3.4 billion in 2004. Most stock market experts believe that the entire market is now due for a mild correction. Stocks have already risen strongly this year and the worry is that the market may be overheating. “I would not be surprised if the market undergoes some correction in the near future,” the broker said. “Although the economic fundamentals are still good, the market has already gone up quite a bit.”


----------



## Krazy (Apr 27, 2004)

*Etisalat likely to be a formidable competitor*

Dubai: The entry of a second company in the telecoms market is expected to reduce call costs and trim profit margins at incumbent monopoly Etisalat but the state-owned operator, which has ambitions to be a regional player, will hardly be blown away by competition, analysts say.

The UAE Government's decision to license a new company to offer phone services is unlikely to have any immediate impact on Emirates Telecommunications Corp (Etisalat).

Any new firm will need time to build a network and set up a marketing and distribution system before offering services.

In the longer term, Etisalat is likely to be a formidable competitor for any new entrant, with its advanced phone network built over nearly three decades, a strong brand and healthy balance sheet.

There could be some gains for the monopoly as well. Etisalat currently surrenders half its profit to the federal government and that profit share could possibly be cut with the entry of competition.

"Etisalat could certainly compete with any new firm," said Wadah Al Taha, research and development manager at Abu Dhabi Financial Services Co.

He said the dip in the company's share price yesterday was a great opportunity for fund managers to buy and add the stock to their portfolio.

"It has great infrastructure and brand loyalty and I would definitely recommend buying the share and holding it for the long haul."

In the first quarter, Etisalat's net profit jumped 24 per cent to Dh1.02 billion, giving it per-share earnings of Dh0.28 and an annualised per share earnings of Dh1.2 at the current growth rate.

Its mobile phone subscribers rose 23 per cent to 3.9 million and the fixed-line base expanded four per cent at 1.2 million.

At yesterday's closing price of Dh35.30, the stock trades at forward price-earnings (PE) multiple of 29.4. At its previous year's per-share earnings it has a PE of 33.9, a premium to the PE of 26.64 of the general Emirates stock index put out by the National Bank of Abu Dhabi.

The government's decision was no surprise and follows a decree last April and similar decisions by other countries such as Bahrain, Kuwait, Oman and Saudi Arabia to open their phone markets to competition.

But for a new entrant, competing with Etisalat in the fixed-line phones business will be hard since local call costs on the fixed line network are free within each emirate. Any new entrant will also incur the cost of laying a new network and could possibly compensate only by offering superior value added services.

Etisalat's mobile phone service generates a sizeable chunk of its profit and it is here that it may be vulnerable since its tariffs are high compared to those of some other countries and competition could force price cuts.
*
Prospects brighten for 3G services*

Mobile phone retailers in the UAE expect 3G services to get a big boost with the coming of a new service provider.

They also forecast competition will pave the way for cuts in tariffs and faster growth in the mobile phone sector.

Arun Nagar, managing director of Cellucom, one of the largest distributors and retailers of mobile phones and accessories in the UAE, said competition was a healthy sign. "We expect better services and a reduction in mobile phone rates," he said.

He, however, said the new company should introduce the latest services to cope with 3G (third generation) mobile phone technology.

Eddy Rizk, communication manager of Nokia for Middle East and North Africa, said the arrival of a new company would benefit both the country and the customers.

"Although mobile phone penetration is quite high in the country, the second company would help accelerate the demand with the launching of better services at competitive rates," he said.


----------



## Krazy (Apr 27, 2004)

*New operator to be local entity*

Abu Dhabi: The new telecommunications company that will be set up will be a local entity with local investment, a top government official said, ruling out any foreign investor immediately.

"The new company will be based exactly on the model of Etisalat and it will be a purely local investment venture," Mohammad Al Ganem, director-general of the Telecommunications Regulatory Authority (TRA), told Gulf News yesterday.

"At this stage there will be no foreign company involved."

He said the licence agreement would be signed within two months and the new company will become operational next year.

The TRA over the weekend approved the establishment of a new telecommunications company, thus ending Etisalat's monopoly.

Ganem said the headquarters of the company as well as the extent of the initial public offering (IPO) have yet to be finalised.

"We are looking at a timeframe of June or July this year for the licence signing and expect the company to become operational in a phased manner from early 2006," he said.

Capitalised at Dh4 billion, the General Pensions and Social Security Authority and some private sector shareholders will take a 40 per cent stake in the company while the remaining 60 per cent has been earmarked for private sector shareholders, including an IPO component.

"The exact percentage of the IPO will be announced soon but at this stage I can say the new company will have only local investment," he said.

Analysts said a second operator is a step in liberalising the telecoms sector in the UAE but the market needs to be opened up to foreign investors.

"The new company, after all, has some government holding like the General Pensions Authority and we are not sure about the percentage of the IPO," said an Abu Dhabi-based analyst.

"Expectations were rife about a foreign operator coming in. I think that is when we can say it is real liberalisation of the market. Even Saudi Arabia has allowed Etisalat to enter its market."

An industry executive said the UAE market must open up to a second GSM operator like the other GCC markets. "The market needs competition from international players with better products, services and technology," he said.

"All that we will see is a new company being set up instead of a full-fledged and open bidding process."

But as one analyst said, the UAE does not need foreign investment at this stage. "The UAE has advanced infrastructure, technology and is the cheapest in the region," said Abdullah Sharafi, economist and director of Gerab National Enterprises.

"The consumers will definitely benefit from the new company, if not on price at least in services, because one can expect a lot of new services."


----------



## AltinD (Jul 15, 2004)

Krazy said:


> *New operator to be local entity*
> 
> ..."*The consumers will definitely benefit from the new company, if not on price at least in services, because one can expect a lot of new services*."


 :bash: :bash: :bash:


----------



## juiced (Aug 18, 2004)

so its basically just a duopoly, both etisalat and this new one will both agree to set the same prices, no real change


----------



## mrai_dubai (Feb 14, 2005)

OLD IS GOLD! I am sticking with Etisalat


----------



## ragga (Jan 23, 2005)

4 Letters --- VOIP.


----------



## Bahraini Spirit (Dec 14, 2002)

Altind_Carnut said:


> :bash: :bash: :bash:



If I was a local, I'll agree with you, no difference really except the more services part, which is just like an excuse really.


----------



## fahed (Nov 10, 2004)

*"Dubai: The entry of a second company in the telecoms market is expected to reduce call costs and trim profit margins at incumbent monopoly Etisalat but the state-owned operator, which has ambitions to be a regional player, will hardly be blown away by competition, analysts say."*


----------



## mafjar (Aug 2, 2004)

It's a cop out


----------

