Etisalat sees fixed-line competition by year-end

Etisalat expects to conclude a long-delayed deal to allow competition in UAE fixed-line telecommunications services by the end of 2014, a company document states, which could threaten its dominant position in the lucrative sector.

Etisalat and rival du have been unable to reach an agreement over so-called bitstream access, or network-sharing, despite beginning talks in 2009.

But now a company bond prospectus states that "Etisalat anticipates that the bitstream access service will be launched by the end of 2014".

Du ended Etisalat's domestic monopoly in 2007 and both offer fixed-line telephone, broadband and television packages, but not in the same districts.

Du is confined to newer areas of Dubai, limiting its ability to win a bigger slice of sector earnings, while Etisalat's 1.05 million fixed-line subscribers at the end of 2013 gave it an 86 percent market share.

These generated Dh8.5 billion ($2.31 billion) in revenue last year, the prospectus states, which is 22 percent of Etisalat's total revenues including its operations in another 14 countries in the Middle East, Asia and Africa.

Fixed line average revenue per user (ARPU), a key industry benchmark, was Dh115 in 2013, the same as a year earlier, but down from Dh130 in 2011.

Etisalat blamed the drop on people opting to use Internet-based phone calls, or Voice over IP (VoIP).

"Competition from du has been a less significant factor in the level of fixed-line ARPU as du only has fixed-line operations in a limited number of regions within the UAE," it states.

The threat from du would therefore increase once Etisalat agrees a network sharing deal with its rival.

In May, du's chief executive Osman Sultan said the lack of fixed line competition was constricting earnings growth after the company reported a 4.8 percent rise in profit for the first three months of this year.

This was the smallest quarterly increase since it broke even in 2008, excluding exceptional quarters when changes to UAE tax rates affected results.

Follow Emirates 24|7 on Google News.