Global Arab Network | Moody's: Blackberry ban impact on UAE-based Etisalat to become visible in Q4

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Moody's: Blackberry ban impact on UAE-based Etisalat to become visible in Q4

Global Arab Network - - George Haddad

Tuesday, 03 August 2010 11:20

UAE (Abu Dhabi) - Moody's Investors Service says that the financial impact on Etisalat of the announced ban on all Blackberry data services in the United Arab Emirates (UAE) will not become apparent until the announcement of the company's Q4 2010 results, which Etisalat is likely to release in March 2011. Although Blackberry services are thought to be one of Etisalat's key generators of revenue and profitability, Moody's believes that the conversion rate of customers to permitted data services and the industry's ability to maintain the momentum for mobile data services will be more important than any short-term dips in revenue in determining the impact on Etisalat.

Moody's comment is in response to the announcement by the UAE's Telecommunication Regulatory Agency (TRA) on 1 August 2010 that all Blackberry data services will be banned in the UAE from October 11 onwards, citing social and national security concerns.

This decision will affect the mobile data services provided by the two UAE telecoms operators - Etisalat (Aa3/stable) and du (not rated) - that run on Blackberry devices. However, alternative mobile smartphones with mobile data services that are also offered by these operators will continue to be allowed for usage. Consequently, Moody's believes that the majority of the estimated 500,000 Blackberry users in the UAE will over time make the switch to these alternative permitted mobile data devices.

In Moody's opinion, the period until the ban on Blackberries comes into effect will allow Etisalat and du to lure customers into making the switch, thereby minimising the financial impact on these two operators from the potential loss of high-usage customers. Moody's understands that Blackberry services will be banned altogether within UAE borders, including international roaming.

Emirates Telecommunication Corporation (Etisalat) is the incumbent integrated telecommunications provider in the federation of the United Arab Emirates. In 2009, the company generated around 86% of its revenues of AED30.8 billion (USD8.4 billion) and its operating profits almost exclusively in the UAE. As at December 2009, Etisalat had 7.7 million mobile subscribers and a revenue market share of around 84%. The company also has a presence in 17 countries outside the UAE through subsidiaries and associates in the MENASA and Africa regions. Its core businesses are mobile voice, fixed line, internet and data services. The UAE government is Etisalat's main shareholder and holds a 60% stake in the company.

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