Arab Advisors Group
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The UAE GSM market is a dream market for new operators- when they are allowed in!
Monday, February 18, 2002

A newly released report from the Arab Advisors Group fully analyzes the UAE communications market and Etisalat. The Arab Advisors Group projects the UAE total GSM and PSTN revenues to grow from US$ 1.6 billion in 2000 to more than US$ 2.48 billion by yearend 2006.

February 18, 2002 -

The UAE comfortably stands out as the Arab World's most advanced communications market. While the partially privatized operator, Etisalat, remains the monopoly operator the country's penetration levels of services are quite impressive by all standards: 32% PSTN penetration, and 57.75% GSM penetration as of yearend 2001.

A new report, entitled UAE Communications Projections report 2002, was released to the Arab Advisors Group's ( Strategic Research Service subscribers in February 2002. The 41-page report is the culmination of painstaking primary research over more than two months by Arab Advisors Group's analysts. The report found that despite reaching high penetration levels for communications services, the UAE market still has quite high Average Revenue Per User (ARPU) levels, which clearly shows that the UAE market has all the fundamentals to support a thriving competitive telecom landscape.

"The GSM market still has room for growth. The subscriber base grew rapidly at a CAGR of 66% between 1997 and 2000." Said Hala Baqain, an Arab Advisors Group's analyst. "Even at a quite high penetration rate of close to 58%, the monthly ARPU per GSM user in the UAE is an impressive 54 US$. This qualifies as a dream ARPU for GSM operators in competitive countries with a similar penetration rate", Ms. Baqain added.

The report, which gives a complete and thorough analysis of Etisalat and its business divisions, shows that GSM revenues have contributed 41% of Etisalat's total revenues in 2000. The Arab Advisors Group believes that the GSM revenues in the UAE will continue to grow at a much higher rate than fixed service revenues. Total PSTN revenues are projected to grow at a CAGR of only 2% between the years 2001 to 2006 to exceed US$ 926 million in 2006. In the meantime, GSM revenues are projected to exceed US$ 1.5 billion by yearend 2006, constituting more than 62% of the combined GSM and PSTN revenues in the country. The Arab Advisors Group projects the PSTN market in the UAE to grow at a CAGR of 5% and to exceed 1.3 million lines in 2006, a penetration rate of 32.5%. GSM market, however, is projected to grow by a higher CAGR of 14% between 2001 and 2006 to reach close to 3.7 million subscribers by 2006.

Naturally, these Arab Advisors Group's projections are grounded in the assumption that a second Mobile operator would enter the market to compete with Etisalat in 2003, an assumption that is very likely given the global trend towards liberalization and the UAE's membership in the WTO. The Arab Advisors Group believes that any substantial liberalization in the UAE must be backed by a strong political will on the part of the Supreme Council of Rulers, the ultimate power broker in the country. Expectedly, market rumors of nearing Internet and GSM competition invariably include references to strong political backing.

The UAE Communications Projections Report-2002 includes 5-year historical figures on 40 plus indicators of the communications market as well as 5-year projections (till 2006). The report's table of content can be downloaded in PDF format from Arab Advisors Group's web page.

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