Etisalat to Invest USD1.9 Bil. in Fibre in UAE

The United Arab Emirates’ incumbent operator Etisalat has announced that it is investing 7 billion dirhams (USD1.91 billion) in expanding its fibre network in the UAE over the next three years, Reuters reports. The operator has already rolled out a fibre network in the capital, Abu Dhabi, and plans to expand to other parts of the country. Last year, it selected Alcatel-Lucent to ramp up the fibre deployment, and just over a year ago invested USD1.36 billion for national fibre deployment (see United Arab Emirates: 12 January 2010: Etisalat Selects Alcatel-Lucent to Speed Up FTTH Deployment in U.A.E. and 11 December 2009: Etisalat Invests US$1.36 bil. for National Fibre Deployment in U.A.E.). Ahmad Abdulkarim Julfar, Etisalat's chief operating officer, commented: “Etisalat has invested 7 billion dirhams so far. We will invest a similar amount in the next three years.”

Outlook and Implications

Etisalat is competing with only one operator in the UAE: du, which Etisalat competes with across all services, but which is also a government-owned entity. Broadband is currently the highest growth sector for most operators in the Middle East and North Africa (MENA) region. It therefore needs considerable investment if network services are to be increased.

• Network-Sharing: More recently, the government has forced Etisalat to share its network with du, effectively increasing competition in areas where one of the operators may have had a monopoly in the past (see United Arab Emirates: 7 January 2011: Etisalat and du Begin Testing of Shared Networks Ahead of National Launch). Both operators have been providing similar broadband and mobile services. However, their part-government ownership forces them to adhere to strict regulatory control. Prices in the country have remained relatively high. Without further competition from fully private companies, there is little chance of price competition. The network-sharing will break the monopolies that both operators have had in certain territories; however, while residents will have more choice of service provider, the added competition will—given that there are only two players—not bring down prices significantly.

• Fibre the Next Step: As Etisalat will soon share its network with du, it needs to offer a much better type of service in the country. Fibre is the only real way that it can offer reliable and fast services to cope with the added content it requires to be a more innovative player in the market. Once full fibre is rolled out, Etisalat will be able to offer much more advanced services on its network, and to a much wider group of people. Owing to the nature of the climate in the UAE and the large focus on home life, entertainment services such as broadband and cable-TV services have become very popular. Etisalat is now entering a race to be the first operator to deploy fibre connectivity. With little else to differentiate its services, it does at least need to be the first to provide a national fibre network.