A tough call

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Getting bigger: du is now active in providing full telco services to almost a quarter of the UAE population.

We're on the right track," insists Osman Sultan, leaning forward in his chair and planting his elbows on the desk in front of him. "Sometimes we would like to run much faster, but then in some areas we are asked to run even before we can walk. And as you can imagine, that's a difficult exercise."

The CEO of du, the UAE's second telecommunications operator, knows that introducing competition against an established incumbent is the very epitome of a difficult exercise. Yet while there have been setbacks - of which more later - it is certainly worth recounting the positive strides that du has made since it launched mobile telecommunications services in February this year. Just last month, the company announced that it had successfully crossed the one-million customer mark, boosted by a retail network that now numbers 16 shops scattered strategically across all seven emirates.

"Our subscriber numbers and our revenue numbers are ahead of the plan, which means that we are ahead even of what we anticipated," smiles Sultan. "We have customers that are now using du as their operator of choice, and that's a very good story for us."

The operator provides mobile telecommunication services across the UAE and also provides fixed line, internet and pay TV services in some of the free zones of Dubai. It is growing fast, and this is reflected in encouraging financial results so far: net sales revenues of US$112.1m for Q3 2007 represented a 304% increase over the same period last year (US$27.7m). They also brought the total nine-month revenue to September 30, 2007 to US$244.3m, an increase of 196% compared with the same period last year (US$82.4m). However, Sultan is typically circumspect when it comes to basking in the glow of figures - he feels - do not tell the whole story.

"The very strong growth in revenue is purely due to the fact that we are not comparing things that can be comparable," he insists. "If we compare with the previous year, Q3 2007 compared to Q3 2006, back then we didn't have any mobile services. Now, we have full mobile activity. The mobile activity is ramping up as it should be, and the good news is that if we compare Q3 2007 with Q2 2007, the growth is really what we were hoping for, and that is very encouraging news."

A quick glance at the figures and it's clear that Sultan has done his homework: Q3's US$112.1m haul marks an increase of 36% over that achieved in Q2 (US$82.1m). According to the CEO, the increase in revenue arises predominately from du's continuing success in acquiring new mobile customers, and servicing its existing customer base. As such, the operator's mobile subscription figures suggest that it services around 24% of the population of the UAE - not bad going for a start-up taking on one of the region's most formidable incumbents.

"Our relationship with Etisalat is a relationship with a newcomer dealing with a very strongly established incumbent operator," admits Sultan. "We all know that we have to work in an environment and in this respect the Telecoms Regulatory Authority (TRA) is really setting a very clear framework. I think we have to give credit to the TRA in how they're setting the framework, but sometimes we would like things to move faster, and that doesn't always happen as we expect," he continues, though he stops short of directly criticising the authority, or the competition. "It's difficult for [the TRA] to interfere in everything."

While Sultan suggests that Etisalat "drags its feet" on occasion, he insists that the relationship between the operators is based on "a very deep mutual respect", and that this is reflected in the professional appreciation shared by top executives from both organisations.

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