A wake-up call

A wake-up call

The UAE’s tentative steps toward a more competitive telecoms industry should give Lebanon pause for thought, says Katherine Azmeh. Is “going public” the only way forward for the country’s telcos?

July 4, 2010 11:46 by Samuel Potter

It seems at last that UAE officials know what other governments in the region have been slow to understand. Vigorous competition in the telecoms sector stands to benefit everyone – from business to citizenry to country.

Competition ensures the development of more sophisticated IT architecture, which in turn paves the way for more foreign direct investment. The benefits of competition in this industry are enumerable, and they keep on accruing, extending to other sectors of the economy.

The shortsighted and undemocratic preservation of state-owned telecoms companies results in high prices for shoddy service, hampers business, and jeopardizes economic expansion. Nothing sends foreign investment scurrying away faster than the marriage of high prices with poor service.

UAE residents are on the brink of a major breakthrough: A choice of telecoms providers, regardless of their location. The telecoms operator, Du, is preparing to gain access to the network of Etisalat, breaking that company’s monopoly on traditional telephones, internet service and cable TV throughout most of the country. Renewed competition will invigorate the television, internet, and phone markets. And more than that, it brings with it a sizeable injection of cash. Du raised more than $270 million through a rights issue last week. Ready cash like that goes a long way towards keeping a company vibrant and attracting investors.

Meanwhile Lebanon plods along with their state managed telecoms industry offering poor quality service at the region’s most expensive rates – not a big boon to the country’s brand equity.

In an industry that is evolving so rapidly, cash resources to make improvements to the national infrastructure is essential. Private investment secures the necessary cash to keep abreast of technological improvements, while ensuring a strong balance sheet for companies. Private investment encourages other investors, it builds confidence, and the effects would ripple through the economy, extending to other sectors.

“Going public” is the only way to go – offering access to the kind of funding that ensures improvements and allows companies, sectors, and economies to compete in the world marketplace.

UAE “government authorities appear to be taking the lessons of competition and innovation increasingly to heart,” the National reported Thursday.

Can Lebanon do the same?