DUBAI
PROPOSALS by the telecoms regulator of the United Arab Emirates to create greater competition between operators have elicited a harsh response from Abu Dhabi’s Etisalat as the telco seeks to maintain its dominant market position, according to a document seen by Zawya Dow Jones.
Etisalat, which competes with Dubai-based Du in the mobile segment in the UAE, has deemed a consultation document on competition by the Telecommunications Regulatory Authority as “considerably insufficient” and has asked the regulator to return to the drawing board for a second round of analysis.
The TRA consultation, published in December and titled “Remedies for ex ante regulation of the UAE Telecommunications Sector”, outlines areas of the telecoms market where Etisalat and Du possess a dominant “market power” that could be used to each telco’s advantage. It also lists practical remedies for limiting that influence, including sharing of fixed line and broadband networks to create greater competition.
“Etisalat has significant concerns regarding both the analysis parts and conclusions of the consultation,” the telco says in responses included in the TRA document.
The regulator identified seven areas where it believed Etisalat had wholesale market power that could be used for the telco’s competitive advantage, including residential and business wholesale broadband, and seven such markets for Du. Etisalat had a so-called retail market power in eight areas, and Du in seven, the TRA said.
A response by Du, also seen by Zawya Dow Jones, praises the TRA consultation and calls for changes to some of the proposals, but is not openly critical.
“The determinations arising out of this consultation will have a profound effect upon not just Du and Etisalat but more importantly upon consumers and the wider economy of the United Arab Emirates,” the Du response said.
Analysts say the calls by Etisalat to start the consultation again is a blow to moves by the TRA to open up the fixed line and broadband market in the UAE, which is currently a monopoly for both Etisalat and Du in the areas of the country they provide the services.
“The contrast in tone should not be surprising,” said Matthew Reed, an analyst at Informa Telecoms and Media.
“Etisalat currently has the much larger share of the fixed market in the UAE and it is likely that an increase in competition would result in Du increasing its share of the market.” The TRA has proposed a “cost oriented” approach that would allow Du access to Etisalat’s larger network and potentially force down prices, analysts say. This would have a detrimental effect on the profits of Etisalat, and potentially Du’s, which would also lower the income received by the UAE government, which is a shareholder in each, analysts argue.
In addition, this would be a double blow for the UAE government as the two telcos are currently in discussions with the Ministry of Finance about cutting the level of royalties they pay. Both Etisalat and Du declined to comment.
The TRA is expected to publish the responses from Etisalat and Du this week, according to a person familiar with the matter, and has set March 28 as the final date to receive comments on those responses. A consultation response document will be published in the week beginning April 28, according to the document seen by Zawya Dow Jones.
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