Mobile numbers dialled back, but UAE still well wired
Headline-grabbing figures on mobile use in the UAE turned out to be exaggerated. But that does not change the underlying potential of the country’s telecommunications industry, experts say.
May 28, 2012
Updated: May 28, 2012 04:00 AM
Despite a big downward revision in official figures for mobile phone and internet penetration, the UAE telecoms market still holds great promise. Ben Flanagan reports
The UAE is a technology powerhouse, or so the headlines told us.
People here were said to have an average of two mobile phone lines each – one of the highest penetration rates in the world. More than 55 per cent of the population are regular users of the internet, we were told.
Such statistics, frequently cited by the regional media, placed the UAE streets ahead of its Gulf neighbours in the use of telecommunications technology.
But such reports assumed that the figures, issued by UAE’s Telecommunications Regulatory Authority (TRA), were accurate.
Which, of course, they were not.
The TRA last month issued a major revision of its figures on telecoms use, having factored in more recent UAE population statistics.
Mobile-subscriber penetration now stands at 149.1 per cent, far less than the previous estimate of almost 200 per cent. Only 27.7 per cent of the population uses the internet, the TRA said.
And so, the UAE has lost its crown as having one of the world’s highest levels of mobile penetration and has far fewer internet users than previously thought.
But despite no longer claiming such headline-grabbing numbers, experts said the revision does not change the overall outlook for the nation’s telecoms business.
Mo Elzubeir, the founder of the media intelligence company Mediastow, based in Dubai, welcomes the TRA’s issuance of revised figures.
“It does look like a sign of maturity that the UAE is trying to review these over-ambitious and fictitious figures,” he says. “It is a big step to make. It’s not something to be taken lightly.”
Mr Elzubeir says that the revisions will have little impact,partly because the TRA’s first figures were never considered to be particularly credible.
“Figures were blown out of proportion – everybody knew that. So everybody adjusted it internally,” says Mr Elzubeir.
Farid Faraidooni, the chief commercial officer at du, says the revision of the TRA figures is little more than a “mathematic change”.
“What changes is the denominator, which is the population,” he said. “The total number of subscribers in the UAE did not change. So from a market point of view, it’s the same total.”
Matthew Reed, a senior analyst at Informa Telecoms & Media in Dubai, says that if taken at face value, the revised TRA figures would suggest there was “more room for growth” in the local telecommunications market.
But few industry executives would have been surprised by the revision to the mobile-penetration figure, Mr Reed said. “It was so high before that people were finding it implausible.”
Petr Molik, the head of the research division at Mena Corp in the UAE, said that the revised figures do not change the overall outlook for the telecoms industry.
“It’s just an administrative change in numbers. Due to the boom in the last 10 years, the population figures were quite understated,” he says. “It doesn’t fundamentally change anything.”
Despite no longer having record-beating figures on telecoms use, the UAE market is still impressive, Mr Molik says.
“We are not number one in the world. But we are still close to the top,” he says. “Are we as developed in mobile technology as Japan, Hong Kong or Singapore? Probably not. But I would still say that compared with the other GCC markets, the quality of the connection is very high.”
Neither Etisalat nor du would have taken much note of the mobile-penetration figures in its forecasts, he adds.
“Both companies know the market in much more detail,” says Mr Molik. “Just because of this restatement, there won’t be an extra half a million [customers] coming to their offices next month.”
Mr Molik says a more pressing concern for telecoms operators in the UAE is focusing on transferring customers to postpaid contracts, which he says are “much more profitable”.
Such a move would help to offset declining revenue per customer in the UAE’s telecoms sector.
In the middle of last year, the Arab Advisors Group forecast that average monthly revenue per user for the full year would be US$30 (Dh110.19), a decline on 2009 and 2010 figures.
So – no matter if the mobile-penetration rate is 150 per cent or 200 per cent of the population – the real opportunity is in expanding profits derived from the existing user base.