United Arab Emirates Telecommunications Report Q3 2009

Our latest update on the telecoms market of the United Arab Emirates (UAE) includes expanded market data sections covering the country's fixed-line and internet sectors. The latest regulatory data shows that the number of fixed telephony subscriptions in the UAE rose significantly in 2008. During the year, growth in the fixed-line sector was stronger than in any of the preceding years. Although both Emirates Telecommunications Corporation (Etisalat) and its rival, Emirates Integrated Telecommunication Company (du), reported fixed-line growth, it is thought that du was responsible for the accelerated fixedline growth in 2008. Growth in the fixed-line sector has been driven partly by continued demand for fixed-line services among businesses, and partly by the absence of a growing market for VoIP services.

An expanding market for VoIP services is often one of the main characteristics of a market where traditional fixed-line services are experiencing rapid decline.

Although the UAE fixed-line market continued expanding throughout 2008, there are signs that, as of early 2009, this situation has begun to change. For the quarter ending March 31 2009, Etisalat reported a total of 0.7% q-o-q decline in the size of its fixed-line subscriber base. This was the first time that Etisalat had experienced a decline in fixed-line customer numbers. Going forward, BMI now predicts that the UAE fixed-line market will experience a slowdown in growth in 2009. The slowdown is expected to continue in 2010, by which time the penetration rate will have begun to fall. By 2011, we predict negative growth for the fixed-line market. In the latter years of our forecast, we envisage faster rates of fixed-line decline; this decline could be faster still if the current restrictions on VoIP usage are relaxed.

Meanwhile, broadband subscriber growth in 2008 was slightly stronger than we had predicted. By the end of the year, the UAE had 529,000 broadband subscribers according to the regulator, equivalent to a penetration rate of 11.2%. Based on the new regulatory data, as well as figures published by Etisalat and du, we have revised our growth forecasts for the number of internet users and broadband subscribers in the UAE. Having reached 60% at the end of 2008, we now envisage the country's internet user base expanding to over 70% of the population by the end of 2009. Meanwhile, we predict a 24% increase in the number of broadband subscriptions in 2009. By the end of the year, we anticipate a penetration rate that exceeds 14%. Growth in the broadband market will continue to be driven by lower prices, and by the deployment of higher speed services. The market will also benefit from the expansion of FTTH infrastructures, which will enable the delivery of new services such as IPTV.

In the current update, the UAE has strengthened its overall score as a result of an improved Telecoms Market rating. However, this improved score has not prevented the UAE from moving one place down our latest set of Business Environment Rankings for the telecoms sector of the Middle East. BMI remains bearish regarding the country's growth prospects this year; indeed, we are now forecasting an outright recession, with the economy expected to contract by 1.7%.

• Executive Summary
• SWOT Analysis
• United Arab Emirates Mobile SWOT
• UAE Wireline SWOT
• United Arab Emirates Political SWOT
• United Arab Emirates Economic SWOT
• United Arab Emirates Business Environment SWOT
• Business Environment
• Middle East
• UAE
  • Table: Middle East Business Environment Rankings
• Industry Forecast Scenario
• Mobile
  • Table: Telecoms Sector ??