The UAE Etisalat telecommunications company has become careful in its investment activities as part of a policy turnaround that replaced its aggressiveness in the past years, its Chairman has said.
Mohammed Omran said Etisalat, one of the largest telecom firms in the Middle East, would not rush to invest outside the UAE despite a decline in the cost of acquisitions because of the 2008 global fiscal crisis.
“We are not as aggressive as we used to be because we have to be more careful about selecting assets due to the global slump,” he told the 2010 country report issued this week by Oxford Business Group.
“However, that said, we are working hard to make several acquisitions…when we examine the potential fro future acquisitions we do so with the understanding that the purchases will be with our own capital.”
Omran said Etisalat, owned 40 per cent by the UAE government, had reached a peak in the amount paid for licence fees and assets a few years ago.
“However, acquisition costs have come down because a lot of investments are focusing on short term results due to the global slowdown,” he said.
“Look at what happened when we bought in Sri Lanka—the reason the costs were lower compared with the earlier peaks is the depressed global situation…so there has definitely been an impact on the sector.”
Omran said Etisalat currently covers more than two billion people across the Middle East, Africa and Asia but added penetration varies in those countries.
“Penetration is very low in most markets…therefore, there is great potential for organic growth….in Egypt and Saudi Arabia, we are seeing additions not only in terms of subscribers but also users of data services,” he said.
“In time, as data services and mobile broadband become available, we expect the same in other markets such as India…the mobile phone is expected to be the computer of the emerging markets…moreover, as smart phones become more widely available and used, we expect to see incremental growth both in terms of subscribers and users. This is why we are investing in the latest technologies such as LTE and fibre to ensure that we have the capacity and infrastructure to meet the demand of tomorrow.”
Asked whether Etisalat, the largest phone service provider in the UAE, had considered exploring mobile virtual network operators (MVNOs), he said the company had already done so but added the best way is to own them.
“We have looked at that already….however, in certain countries it may be that the best way to have MVNOs is to actually own them…we went through it all a few years ago and we will examine its potential again, perhaps in 2011,” he said.
“Wherever we thin that it could be valuable, then we can add it in a particular country….but if we look at MVNOs around the world, there are more unsuccessful cases than there are successful ones…..therefore, we have to learn from these lessons and examine how best to employ MVNOs in a manner that will be fruitful…that is a big issue that we are looking at as we are evaluating the concept…when we deem it acceptable within those parameters, we will seek the necessary licence.”