SHARJAH, 10 May 2005 — Tough competition is expected in the hitherto monopolized telecom sector of the UAE following a government decision to license a new company with a capital of four billion dirhams.
Until now, the government-controlled Emirates Telecommunications Co (Etisalat) was the only operator in the sector. The state owns 60 percent of stakes in Etisalat and UAE citizens own the rest.
The state pension and social security fund and other private investors will hold 40 percent stake in the new entity, which is expected to be operational early next year.
According to Mohammad Al-Ganem, director-general of the Telecommunications Regulatory Authority (TRA) — which approved the decision this week — the new company that will be set up will be a local entity with local investment and there will not be any foreign investors at the launching stage.
“The new company will be based exactly on the model of Etisalat and it will be a purely local investment venture,” Al-Ganem was quoted as saying in the local press. “At this stage there will be no foreign company involved.” The license agreement is expected to be signed before August this year. Other details are yet to be finalized. For years, it was being argued that the UAE should open up the telecom sector for a second GSM operator.
Minister of state for finance and industry and chairman of TRA said licensing a second telecom operator is the first step in the liberalization of the sector. “We will create the fertile ground and environment for all telecom companies in order to achieve their aspired goals in the short and long term,” he told the official WAM news agency.
Etisalat is following a strategy to become a regional operator. It owns a 50 percent stake in Atlantique Telecom, a West African mobile operator, and substantial shares in Etihad Etisalat in Saudi Arabia, Qatar Telecom (Qtel), Sudatel, Africa Zanzibar Telecom (Zantel), satellite based telecoms service provider Thuraya, and e-Marine, an international cable link. Etisalat is also seeking telecom licenses in Turkey and Pakistan.
