By Claire Ferris-Lay
Osman Sultan, the CEO of du, says he still sees significant growth in the UAE's second largest telecom operator
Osman Sultan is in great demand. It’s one of the technology
industries biggest events of the year and every journalist wants to know what
third quarter results the CEO of the UAE’s second largest telecom operator will
be posting in the coming weeks.
Unsurprisingly Sultan leaves every newspaper and newswire
disappointed with his refusal to reveal any financial information at all. “du
is a growth story,” he simply says. “We will have a very encouraging growth
rate compared to last year.”
Weeks later the firm announced it had more than doubled its
third quarter profits to $44m from the same period the previous year. The
results beat analyst’s estimates by more than $6m and proved that Sultan’s
growth story is indeed true, despite the fact that mobile penetration rates in
the UAE are now well over 200 percent.
The results were in stark contrast to its rival Etisalat’s
results for the same period. The UAE’s largest telecom operator posted declines
of 23 percent on the back of a rise in expenses and increased competition from
du. During the same period 159,800 new customers signed up to du’s mobile
business compared to Etisalat’s 10,000 new mobile users, the fifth successive
quarter it added more customers than Etisalat.
Challenging its rival is exactly what du intended when it
launched its operations back in 2007, breaking Etisalat’s 40-year telecom
monopoly in the UAE. Under Sultan’s lead the firm has grown its market share of
active mobile subscribers in its home market to an estimated 37 percent. But he
doesn’t plan to stop there. “I wouldn’t be doing my job if I didn’t see any
reason for us not be at parity with the other player [for customers] so that
gives us the potential for possible growth in the coming years,” he says,
declining to offer a timeframe in which to achieve that goal.
“I don’t think it’s important how quickly,” he continues.
“Obviously it won’t happen overnight; every point of market share you get is
more and more difficult. du has always been committed to providing value to the
market [and] we need to continue on that track. We are committed to making this
happen while not compromising on the healthy profitability of the company.”
For some time it didn’t look like the operator would be
offering anything different than what its rival wasn’t already offering. Its
call tariffs back in 2007 were almost identical to Etisalat’s, eliminating any
possibility of a price war between the two. Some might say not much has changed
to boost competition between the two competitors. A ruling from the
Telecommunications Regulatory Authority (TRA) introducing mobile number
portability, which would allow Etisalat customers to move to du with the same
telephone number and vice versa, was announced several years ago but has yet to
be introduced. Meanwhile an infrastructure deal allowing customers to choose
their operator for fixed line and broadband services has also been delayed.
But slowly the tide is starting to turn. When du introduced
a payment plan to its post-paid customers in September, for example, Etisalat
responded with its own MyPlan promotion, offering customers more minutes for a
lower monthly charge.
Does Sultan think there is enough competition in the UAE’s
mobile sector? He says he disagrees with the former head of Vodafone Qatar,
Grahame Maher, that the UAE lacks any real competition. “When we see the
dynamics of the different offers in the market — offers and counter offers — I
think everyone can make the comparison. So my answer is no, I don’t agree with
this. I see competition in what is happening to customers. If you look at how
the prices have moved from 2007 until now, every day there is a new offer of
giving value for money [so] I think competition from a customer’s point of view
is there,” he says.
Continued on next page
When pushed a little further, however, he admits that there
can never be enough competition. “There is never enough competition but good
competition is built on the sustainability of the players,” he explains. “I
think that there is a progressive agenda from the authorities, it has been
indicated that this will be a progressive journey, and I think this makes a lot
of sense. So I think we should continue down that track. The most important
thing is to ensure that customers have the choice, which is today happening in
the mobile [market] and will happen through the right value proposition on the
fixed and broadband market for home services.”
It is in the fixed line services and broadband sector that
du could see some of its biggest growth. Customers can currently choose their
operator of choice for fixed line services through a service called Call Select
but this will soon be expanded to include broadband following an agreement in
July that would allow both UAE operators to share the country’s infrastructure.
Once implemented the agreement with enable both parties to provide voice,
internet, data and TV services across each other’s networks, allowing
customers, for the first time, to choose their operators.
Negotiations between the two were confirmed in July and are
expected to be completed in the first half of 2011 after some delay. “You have
already some competition on fixed voice….where you can get a subscription and
you can use the existing service you have but that’s not the ultimate nirvana
solution, this will happen through the infrastructure sharing,” explains
“Today there is no real competition in the fixed line
services because most of the people will not distinguish between their voice
service and their broadband and they are right, I don’t want to have one
provider for one thing and another for that. This is new; this is the first
time that it will happen in this part of the world. The European experiences
took some time, so I think we should be realistic in setting the ambition,” he
Although du has no plans to offer its mobile services abroad
it did launch a digital portal, anayu (the name of which is a combination of
‘ana’, meaning ‘me’ in Arabic, and the English word ‘you’) in October. The
portal, which has so far only been launched in beta format, is a trilingual
mobile and web platform that allows users to share games, music and other
information online. du has teamed up with media companies such as Rotana, MBC
and Eurosport to provide it with content and has registered “tens of thousands
of users,” according to the firm’s chief strategy and investments officer.
While Sultan says these numbers are not yet having a
significant impact on the operator’s bottom line, it is important to start
looking at businesses that could have a long term effect on its profits. “We
need to attract growth. The mobile [sector] is slowly gaining a bigger market
share and fixed line is expanding very slowly in the UAE so we need to start
looking at businesses for the longer term. We are starting to see with some
businesses that are on the boarder of the standard telecom/operator model,” he
“We are seeing a transformation in our industry,” he
continues. “We have new players that are coming onto the scene; people like the
social networks, internet players and ISBs that are driving more and more
significant usage and I think that seeing how we grow in this space and how we
start to position ourselves in this space and seed tracks of growth at the
longer term is something we owe to our shareholders.”
du might be some way off to monetising anayou but Sultan’s
assurances that he still sees growth despite the increasing competition have so
far proved to be true.
One of the best business leaders in the middle east. His vision, efforts, directives achieved a massive remarkable success in UAE telecommunication market. Nobody expected the sharp growth of du and ETC are amazed ( shocked ) from this growth. And that's why the last Ad by ETC is weird talking about the coverage! Which is not the issue of du focus anymore after 4 years from the launch. Don't get shocked if du gained more than 50% of the GSM telecom market in UAE.
Mr. Khalid : Totally wrong, may be you never visit Du. If like this every time - Minus. Every figure 1 will miss.