Boston, MA -- (SBWIRE) -- 07/29/2013 -- BMI Industry View

BMI View: Although the UAE's telecoms market continues to record strong growth in the consumer segment, the country's telecoms service providers are increasingly targeting the corporate market, particularly small and medium-sized enterprises (SMEs), with converged communication solutions and managed services. We consider this a wise move in view of the huge gap in the market due to the lack of third-party solution providers as well as the potential to develop a consistent revenue stream to offset the shortfall from declining revenue growth in the consumer segment.

Key data

- The mobile market grew by 3.9% in Q113 and 12.8% y-o-y in the 12 months March 2013 to bring mobile penetration in the UAE to 171.3%.
- The fixed-line sector grew by 2.1% in Q113 and 6.8% y-o-y in the 12 months to March 2013.
- The fixed broadband sector grew by 2.8% in Q113 and 9.2% y-o-y in the 12 months to March 2013.
- Market average mobile ARPU contracted by 4.7% in Q113.

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Risk/Reward Ratings

The UAE has climbed to fourth position, from fifth, 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 FY12 and Q113. There was a significant upgrade to the UAE's industry rewards score this quarter to reflect strong continued growth in voice and data subscriptions. However, the country continues to be held back by its low industry risks 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.

Key Developments

The Telecommunications Regulatory Authority (TRA) announced on May 22 2013 that it will allocate the 700MHz and 800MHz frequency bands for the exclusive use of mobile broadband services. By assigning the 700MHz and 800MHz frequency bands for mobile broadband use, the regulator is enabling operators to cover a much wider surface area with fewer base stations and allowing them to be much more time and cost efficient in the rollout of country-wide LTE networks. Etisalat rolled out 4G services in 2011 and du launched in 2012. But, as of May 2013, Etisalat only had LTE coverage in Abu Dhabi, Dubai, Al-Ain and in the Northern Emirates and du's LTE network only covered Abu Dhabi and various sites along major highways to the south and west of the capital. By extending their networks to rural areas, the UAE's mobile operators will be able to cater to new customers and increase the data usage of existing customers. Those who live in the desert as well as tourists on desert safaris and Emiratis retreating to holiday homes will all be keen to have access to high-speed mobile broadband outside urban areas.

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