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Gulf telcoms bet on data as growth ebbs

Gulf telcoms bet on data as growth ebbs

Telcos face numbers challenge as only a sixth of subscribers access data through handsets even as the UAE posts the highest mobile penetration in the world.

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May 18, 2011 5:34 by



The UAE boasts the highest mobile phone penetration in the world at more than 2.3 phones for every person, yet less than a sixth of people also access data through their handsets.
That offers operators a unique growth opportunity in a saturated home market, where more than three-quarters of the population are foreign-born. Many are low-paid labourers who spend a large portion of their wages contacting home.
“It’s very important I speak to my family so I know what’s going on back home,” said Pablo, 22, a Filipino waiter in Dubai who has been working at an Asian restaurant for a year.
He spends one-third of his 1,500 UAE dirhams ($410) basic monthly salary on a pre-paid mobile phone subscription to communicate with his mother, father and sisters in Manila.
Pablo is also wireless carrier du’s ideal customer for fuelling its growth away from basic services to data-rich offerings as it challenges former UAE monopoly Etisalat .
The average low-income wireless customer typically spends no more than 100 dirhams per month, much of which goes on voice calls home. But as the price of handsets and data packages fall, workers are expected to choose increasingly cheaper and interactive ways of communicating with loved ones abroad such as instant messaging and social networking.
Data generated about 15 percent of Etisalat’s domestic revenue last year and 9 percent for du. The latter has gained an estimated 40 percent mobile market share since its launch in 2007 and is now trying to boost average revenue per user, or ARPU, by targeting business and wealthy customers as well getting low-wage people to use more services.
“You need to find ways to monetise this data – different tariffs, different users, different type of segmentation,” said du chief executive Osman Sultan.
The UAE’s phone penetration is the world’s highest at more than 230 percent. Yet only 16 percent of people also access the internet through their mobile phone, according to a report from the local regulator.
“There’s still growth in the market — this won’t be driven purely by adding subscribers, but from data and internet revenues,” said Irfan Ellam, Al Mal Capital telecoms analyst.
“Mobile data and fixed broadband still have a pretty low penetration compared to the West, relative to GDP per capita.”
About 3.5 million smartphones were shipped to the Middle East in the first-quarter of 2011, up 45 percent from a year-earlier, according to Canalys, and were forecast to achieve compound annual growth of 18 percent between 2009 and 2014.
“All operators are pushing smartphones because they drive more data use,” said Pete Cunningham, Canalys lead analyst.
The growth of data has caught regional operators by surprise, and made it painfully clear that their pricing and ability to offer such services must quickly evolve.
“With data traffic exploding and revenues not growing in the same proportion, investments required to maintain service levels end up eroding the return on operator’s investments,” said Marc Biosca, Principal at A.T. Kearney.



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