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Tue 4 Oct 2011 02:52 PM

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Price wars are bad for business, says Etisalat

UAE telco is mulling partnerships, new licences to expand, says senior exec

Price wars are bad for business, says Etisalat
Etisalat has reported falling profits in five of the past six quarters

Emirates Telecommunication (Etisalat) is open to partnerships or obtaining new licences as it seeks to expand into different markets, the United Arab Emirates carrier said on Tuesday.

Available mergers and acquisition opportunities are decreasing despite an ongoing need for consolidation within the industry, Ahmed bin Ali, Etisalat's senior vice president for corporate communications, said on the sidelines of a business conference.

"Competition is healthy and good for customers but if we are overdoing it, it will be miserable for customers. Price wars [mean] less services will be introduced, less investment," Ali said, adding that regulators can play a role in helping small players consolidate with other operators.

Ali said the company has enough reserve cash to buy another operator, if the opportunity meets its investment strategy.

But in the absence of consolidation opportunities, Ali said the company sees greenfield licences or partnerships as an ideal way to enter markets, such as Asia and Africa.

"There's a chance of consolidation [but] if this is not available, the right model for most of the market is partnering or alliances between operators where they can benefit from economies of scale, resources and technology," he said.

"Different operators in Asia and Africa will be able to benefit from our experience."

Etisalat, which operates in 18 countries, has reported falling profits in five of the past six quarters.

About three quarters of its revenues in the first half of 2011 came from the UAE, where rival du now claims a 44 percent share of the oil exporter's mobile subscribers. Du launched services in 2007.

Mobile penetration in the UAE was 145 percent in 2010, down from 154 percent a year earlier, according to the International Telecommunications Union.

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Telcoguy 8 years ago

If there is an operator who knows a lot about price wars that is Etisalat, outside the UAE the main (only) strategy used by Etisalat's operation has been to undercut every single price plan. That may explain the erosion on ARPU/AMPU.
I am sure the operators in the other markets where Etisalat is present will appreciate this.

Du customer 8 years ago

Price wars are bad for business? Oh boo hoo. They're also marvellous for consumers.

Swings and roundabouts.

Khalid Mohd. 8 years ago

Yes monopoly is way easier than competition. Sorry Mr Ali, but we are not sympathizing with you. Etisalat has drained us. Etisalat offers way better prices in markets where real competition exist, and the contrary is correct locally.

amit 8 years ago

Even today to make international or local calls is very expensive in UAE.Compare this with a developing call like india where mobile to mobile local calls are in fils.Grow up and be more competitive than complain

Kevin 8 years ago

There is no doubt that Etisalat's monopoly is one of the reasons why lots of businesses are migrating elsewhere.

Trish 8 years ago

That is called fair competition in a healthy market... Where monopoly is not allowed, and is against the law.. Like Microsoft who was sued by Govts. all over the world.. How do you increase profits then? By better service!

opsecusa 8 years ago

I am not sure what business model Mr. Ali is referring to, but price wars are caused because of competition, the ones that benefit are us the consumers.

Competition will keep you in check, competition will keep you honest, competition will keep you working hard to develop your products and offer it for a realistic value.

Prabhu 8 years ago

Do not send bills for few months, and if they do not pay disconnect the line and still keep charging for the dead lines.

Of course, bad for business with eithics not without.

MD 8 years ago

Kevin: You are absolutely right. The exorbitant rates charged by Etisalat or even du hurt businesses from operating in the UAE. Duopoly is actually monopoly here.

MD 8 years ago

Etisalat is participating in price wars in other markets. So why are they complaining? Perhaps they are subsidising other markets by keeping prices high in the UAE. Sorry, but I find it hard to sympathise with Etisalat's stance.