UAE telecommunications regulatory authority rules out third operator

Telecom Lead Middle East: The UAE Telecommunications
Regulatory Authority (TRA) has ruled out the prospects of licensing a third
operator in the country at present.


TRAI has denied news reports suggesting that in 2015 the
regulators would open the market to a third telecommunications provider. TRA
does not, at this time, have any intention whatsoever to license a third
operator in the UAE telecommunications market, TRA said in a statement.

The authority said it would like to reaffirm that both
Etisalat and du are currently meeting the needs of the UAE market.

The TRA sees no need to add a new operator to the UAE
market at this time; hence it has no immediate intention to do so. What was
circulated in few local newspapers is misleading and does not accurately
express the actual statements of the TRA regarding the issue,” said Majed Al
Mesmar, deputy director general of TRA.

If the plans come to fruition, they would be
credit-negative for the incumbent integrated telecom provider etisalat (Aa3
stable) which currently only faces competition from du (unrated)  since
its market share, revenues and cash flow are likely to further erode given the
already high penetration rates in the UAE,” said Moody’s Investors Service.

The TRA reports 199.3 mobile subscriptions per 100
inhabitants for December 2011, according to a media report.

The ratings agency said when competition is introduced into
more developed and saturated markets, the number one (Etisalat) and two (du)
players suffer. 

Etisalat financial results are already under pressure. In
2011, Etisalat recorded revenue losses of three per cent for the UAE and its
reported segment results decreased by 21 per cent in the face of fierce
competition from du. For its financial year 2011, Etisalat reported a drop in
its segment result margin of 10 per cent for its UAE segment, Moody’s said.

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