Etisalat To Cut Rates By 30%

UAE telecom firm Etisalat plans to cut international call tariffs to various countries by up to 30 per cent, an executive said, as the former monopoly tries to win back market share and stem the spread of Internet-based phone calls.

The plans are at an early stage and need regulatory approval, but are likely to come into force in the second half of 2012, Rashed Alabbar, Etisalat vice-president for home product marketing, told Reuters.

Etisalat already has a favoured country call plan where customers can get up to 40 per cent off standard tariffs.

“On top of that, we’re studying whether to further reduce international rates,” said Alabbar. “If we are going to implement something in landline, most probably it will also be in mobile because we wouldn’t cannibalise other product lines.

“(A) 10 to 30 per cent (cut) is what we are currently looking at across local and international calls. It should cover the most popular destinations.”

These may include India, Philippines and Pakistan, which have large expatriate communities in the UAE.

International calls are a crucial revenue source for Etisalat and rival operator Du, with about 89 per cent of the UAE’s 8.3 million population foreigners.

The proposed cuts come as Etisalat, which operates in 17 countries, refocuses on its domestic market.

According to a fourth-quarter results presentation to analysts, the UAE is home to about six per cent of Etisalat’s 167 million subscribers yet provided 73 per cent of revenue in 2011, with foreign units – which span from West Africa to Indonesia – providing limited revenue diversification.

Analysts say Etisalat was distracted by its foreign expansion, allowing Du to build up a 47 per cent share of the country’s mobile subscribers since launching services in 2007.

“Du has been taking the initiative, primarily in the mobile market which is where the main competition is,” said Matthew Reed, a senior analyst at Informa Telecoms and Media in Dubai.

“Etisalat has been losing market share quite substantially and part of that is from du being more competitive on pricing.”

Etisalat also faces a rising use of Voice over Internet Protocol (VoIP) services – free Internet-to-Internet calls and cheap Internet-to-phone calls – as people upgrade to smart phones with VoIP capabilities and broadband penetration rises.

“That’s one of the reasons, but not necessarily a major one (for price cuts) – the destination countries we’re targeting, not all customers have PC-to-PC VoIP capabilities,” Alabbar said. “People making free calls, no one can compete with that.”

Etisalat recently changed its low-end broadband tariffs so that subscribers get double the bandwidth for the same price.

“It’s part of the overall product revamp for home products,” said Alabbar. It comes ahead of a long-delayed network sharing deal to allow competition in fixed line services.

Both Du and Etisalat offer fixed-line voice, broadband and television services but not in the same districts.