Dealers count losses from BlackBerry ban

Abu Dhabi’s mobile phone dealers have started to count their losses from a decision by the UAE’s telecommunications regulators to block BlackBerry services, which had sharply boosted their business in just over a year.

Dealers said they believe more than Dhfive million worth of BlackBerry handsets are now lying idle at shops on Defence Road, the emirate’s main cellular phone shopping centre and the largest used mobile phone market in the region.

Since the decision to ban such services in early October was announced by the Telecommunication Regulatory Authority (TRA) a few days ago, dealing in BlackBerry devices has almost come to a standstill, they said.

According to shop owners, more than 3,000 brand new BlackBerry handsets are currently in store at their shops while hundreds of second hand devices, produced by Research in Motion of Canada, are also stacked on shelves.

“I estimate that the brand new handsets are worth more than Dhfive million as each retails at around Dh1,800,” said Imad Hariri, manager of Jawal mobile phone shop on Defence Road, where over 150 cellular shops operate.

“Since the decision to ban the service was announced, I have not sold a single BlackBerry device…to my knowledge, the other shops which I know also have not sold any…dealing in this device has completely stopped except for people who come to sell their handsets….I am afraid that all of us will suffer heavy losses from this decision and the losses could be bigger if Etisalat and Du fail to reach agreement with RIM and the ban drags on.”

Besides the brand new handsets, shop owners are worried that they will also suffer from losses from the used devices they have as well as BlackBerry’s accessories they have accumulated, including covers and cases.

One dealer said he has more than Dh100,000 worth of BlackBerry accessories, most of which have been bought from Dubai along with the handsets.

“Since the ban was announced, I have sold only around five BlackBerry covers….I used to sell 40 or 50 covers every day…this is a real problem for us because it means huge losses,” said Maher Rushdi, a mobile phone dealer.

“But it is not only the accessories and the devices…we have done a very good business from unlocking and repairing BlackBerry devices….I think all this will stop now because no one is buying the device and those who have it want to sell it…I believe total losses in this market could exceed Dh10 million.”

While the ban could give a shot in the arm to the local market share of Nokia, Samsung and other major mobile phone makers, dealers believe the expected increase will only partly offset the loss of the BlackBerry business.

“The mobile phone market in general has been dormant since the global fiscal crisis…it could have got worse in the absence of BlackBerry, which had become an obsession for many people before this ban,” said Mahmoud Hindawi, manager of the Asala mobile phone suppliers on Defence Road.

“I think we will now be back to basics…we will focus on the known brands but I do not expect a surge in business as was the case when BlackBerry arrived…the market is already saturated due to the sharp increase in mobile phone users and the mushrooming of cellular phone shops in every part of the country….growth in sales and subscription has sharply slowed down in the past two years.”

Despite its relatively small population, the UAE has one of the largest mobile phone markets in the Middle East, with an estimated turnover of more than Dhtwo billion every year.

The country also has one of the highest mobile phone penetration ratios in the world, surpassing 200 per cent at the end of 2009.

Around 72 per cent of the market is controlled by Etisalat and 26 per cent by Du.

Between 2002 and 2008, the number of mobile phone users in the UAE leaped by a staggering 27 per cent annually, one of the highest rates in the world.

From around 2.4 million, the number rocketed to 7.6 million at the end of 2007 and exceeded nine million at the end of last year.

In terms of GDP per capita, the UAE is only second to Qatar in the Arab world, with around Dh95,000 in 2008, according to official data.

Realising its lucrative market, key mobile phone manufacturers have been locked in an endless battle to grab a bigger share of the UAE, cutting prices and expending their distributor and services network in the country.

Dealers said Finland’s Nokia has remained the unquestionable market leader, controlling more than 50 per cent of the turnover.

Other major mobile phone exporters include Samsung, SonyEricsson, LG and Motorola.

Estimates provided by most dealers put Nokia’s share in the UAE market at around 55 per cent, followed by SonyEricsson at 17 per cent,.and Samsung at 15 per cent.

The rest is controlled by LG and other brands.

An estimated 500,000 people are subscribers to Blackberry services in the UAE, second only to Saudi Arabia in the region.
 

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