Boston, MA -- (SBWIRE) -- 06/03/2013 -- The UAE telecoms market posted strong growth across the mobile, fixed-line and internet sectors in 2012, highlighting the country's sound economic outlook and the continued influx of migrant workers and temporary visitors. We expect positive subscriber growth to continue in the short term, but we caution that operators will need to step up efforts to migrate existing customers to higher value services in view of the inevitable slowdown of subscriber acquisition in the future due to market saturation.

Key data

- The mobile market grew by 4.0% in Q412 and 17.1% in FY12 to bring mobile penetration in the UAE to 166.9% at the end of 2012.
- The fixed-line sector grew by 2.1% in Q412 and 7.8% in FY12 to bring fixed-line penetration to 24.3% at the end of 2012.
- Our revised broadband data shows the broadband sector grew by 16.2% in 2012.
- Mobile ARPU contracted by 4.4% in 2012.

Risk/Reward Ratings

The UAE climbed to fifth position, from sixth, in this quarter's update to BMI's Risk/Reward Ratings (RRR) table. The UAE's telecoms market experienced strong subscriber growth across the three main service sectors, while country's main telecoms service providers recorded impressive financial results for the full year ended December 2012. There was a significant upgrade to the UAE's Country Risk score this quarter to reflect strong macroeconomic fundamentals and political stability relative to other countries in the region. However, the country continues to be held back by its low Industry Risk score. Government involvement in the telecoms sector is high - it has a stake in both of the country's operators - so there are few incentives, or opportunities, for external investment.

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Key Developments

Etisalat and du have ramped up their investments in various large and small businesses in the UAE in order to diversify their revenue streams as well as achieve full utilisation of their network infrastructure.

In March 2013, du announced plans to deploy Cinterion machine identification module (MIM) cards from Gemalto to support its push into machine-to-machine (M2M) services. The technology will support du's efforts to develop a range of data and telemetry services for customers across a wide range of industry verticals, enabling it to break its reliance on its core fixed and mobile telecommunications services for revenue growth. The operator also selected Cisco's Unified Computing System (UCS) and Nexus Switching Platform in February for its virtualised infrastructure. In November 2012, du signed an agreement with global interconnection and datacentre specialist Equinix to deliver a carrier neutral hub to serve the Middle East region. This was followed by a partnership with cloud security and compliance specialist Qualys Inc. to deliver vulnerability and compliance management services to businesses in the UAE.

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