UAE – Telecommunications Sector Overview

ContentsGeneral Information – Telecom...................................................................................................................2

Telecom Sector........................................................................................................................................2

General Characteristics............................................................................................................................3

Growth and Subscriber Projections (3 Years - 2007-2010)......................................................................3

Regulatory Authority and Compliance.....................................................................................................3

Competition.................................................................................................................................................4

Etisalat.....................................................................................................................................................4

Business Divisions................................................................................................................................4

International Interests.........................................................................................................................5

Afghanistan.........................................................................................................................................5

Mobily..................................................................................................................................................5

Pakistan Telecommunication Company Limited (PCTL).......................................................................6

Atlantique Telecom..............................................................................................................................6

Thuraya................................................................................................................................................6

Canartel...............................................................................................................................................6

ZanzibarTelecom (ZANTEL)..................................................................................................................6

Du............................................................................................................................................................6

Carrier Services....................................................................................................................................7

International Services..........................................................................................................................7

Voice Services......................................................................................................................................7

Economic Conditions...................................................................................................................................8

Charges....................................................................................................................................................9

Etisalat.................................................................................................................................................9

Useful Parameters.................................................................................................................................10

Top Incoming and 0utgoing Destinations..................................................................................................10

Market Shares...........................................................................................................................................11

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UAE – Telecommunications Sector Overview

UAE is one of the most developed economies in the Middle East consisting of 7 emirates states. The UAE government is friendly towards the development of ICT technologies

General Information – Telecom

Telecom SectorThe numbers of fixed, mobile and internet connections in the nation are enlisted in the table below. The UAE is also compared with keeping the Middle East as a benchmark alongside India

ITEM 2003 2004 2005 Sep 2006

Main telephone lines in operation (thousands)

1,136 1,188 1,237 1,299

Mobile subscribers (total prepaid & postpaid) (thousands)

2,972 3,683 4,534 5,258

Mobile subscribers - prepaid (thousands)

2,495 3,186 4,007 4,709

Total Internet subscribes (thousands)

347 418 527 646

Dial-up internet subscribers (thousands)

317 364 399 432

Broadband internet subscribers (thousands)

30 56 128 214

Table 1: Source: www.tra.ae

Variable India (Group: South Asia)

UAE (Group: ME and North Africa)

actual normalized actual NormalizedTotal Telephones per 1,000 People, 2004 84.5 6 1127.5 8.24Main Telephone Lines per 1000 People,

200440.7 6 274.9 8.82

Mobile Phones per 1,000 People, 2004 43.8 6 852.6 8.24Computers per 1,000 People, 2004 12.1 6 115.7 6.47

Households with Television (%), 2004 37 6 85.9 3.53Daily Newspapers per 1,000 People, 2000 60 6.67 n/a n/a

International Internet Bandwidth (bits per person), 2004

11.4 5 351.2 6.92

Internet Users per 1000 People, 2004 32.4 8 320.6 8.82Price Basket for Internet (US$ per month),

20038.7 8 13.1 8.24

Availability of e-Government Services (1-7), 2006

3.55 7.5 4.85 9

Extent of Business Internet Use (1-7), 4.6 8 4.1 8

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2006ICT Expenditure as % of GDP, 2005" 5.91 5 3.58 5

Table 2: Source: www.worldbank.org (Knowledge Economy Index)

General CharacteristicsPopulation: 3,750,054(as of 2005)

GNI per capita (US$): 23,770.00(as of 2005)

Source: www.worldbank.org

Growth and Subscriber Projections (3 Years - 2007-2010)The projections for Internet lines are given below. It is estimates that there will be increase in the fixed line deputed on the back of all the development happening in the Emirates. There is estimated to be an about 25% growth in the internet customer usage. The projections for previous years have been used

Source: www.trai.gov.in

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Regulatory Authority and ComplianceThe Telecom Regulatory Authority ( www.tra.ae) of UAE is committed to the development of the region as one of the hubs of ICT technologies in the area.

Information Policy & Law in the UAE is mixed subject area. In one area the government exerts control over the Internet through censorship and monitors citizen with biometric ID cards. On the other side the country has agreed to many World Intellectual Property Rights Organization treaties establishing a fairly trustworthy system for respecting intellectual property rights. One potential problem however is that the countries legal system is very tightly tied to the wealthily families within the UAE and this according to some outside observers may affect its ability to justly determine issues relating to property rights disputes.

CompetitionMobile subscribers exceeded 4.5 million by the end of 2005, up 23% from 2004. This represents penetration of nearly 100%. Internet and broadband penetration also witnessed huge growth during 2005, with penetration at almost 51%. Etisalat has concluded roaming agreements with over 265 operators, and even Etisalat’s prepaid mobile subscribers can roam in many of these networks.

Until 2006 Etisalat had a monopoly over ICT services in the EAU. Several years earlier Federal Law by Decree No. 3 of 2003 called for Telecom reform and liberalization. In May 2005, the UAE Telecommunications Supreme Committee, the entity empowered by the UAE government to oversee the telecommunications sector, issued a decision awarding a second license to a new telecommunications company allowing it to operate as a full service provider of telecom services in the UAE, offering video, video and data services to individuals and businesses. This was a first step in the liberalization of the telecommunication infrastructure market in the UAE. There is a central Telecommunications Regulatory Authority (TRA). That oversees the telecommunications industry in the country.

The new Telecom company which was formed in 2006 to compete against Etisalat is called du (http://www.du.ae/). During 2006 the company was getting its operations in place and by December 27, 2006, du and Etisalat signed an Interconnection agreement allowing their networks to co-exist and communicate with each other.

EtisalatEtisalat is the main operator in the UAE offering a variety of services from Mobile Telephony to Leased Lines and Circuits. It also has an interest and stakes in Foreign operators.

Business DivisionsThe company has four divisions

UAELAB Etisalat Academy Emirates Internet Exchange – EMIX

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Emirates Data Clearing House - EDCH

Emirates Internet Exchange- EMIXEMIX is the first Network Access Point (NAP) in the Middle East. Built on multiple STM-1 circuits landing on the East and West coasts of the UAE, EMIX’s state-of-the-art platforms are designed for the transport of high-quality and high-speed Internet service. EMIX is also currently connected to backbone providers in the USA, UK and Asia, apart from strong regional and international peering arrangements. EMIX has its own Network Operation Centre for customer queries and online statistics, and the division is completely ISO certified.

Emirates Data Clearing House- EDCHEDCH was established in 1994 to provide a single point of contact for the roaming facility offered by GSM operators. EDCH is one of only five companies worldwide that offers electronic data transfer and financial services. More than 43 operators in 35 countries avail of EDCH services like simplified roaming, better utilization of available resources, and improved profitability. Specific services of EDCH include data and financial clearing and settlement, management reporting with fraud control, and negotiations of roaming agreements for clients.

There also have interests in laying of Cable Infrastructure and e-marine initiatives

International Interests

Etisalat MisrEgypt’s third mobile operator. The network infrastructure build is presently underway, with more than 400 base stations and state of the art contact centers having been constructed to date. GSM service under the “Etisalat” brand is scheduled for commercial launch in major cities such as Cairo, Alexandria, and Hurghada and Sharm el-Sheikh in the first quarter of 2007. Throughout 2007, the infrastructure build will continue at a rapid pace, with expected coverage to exceed 70 percent of the population by end of year. Etisalat Misr also trial led 3G service in 2006 marking the first voice and video call over a 3G network in Egypt. This service ushers a new era of communications in the country, with the latest generation of the mobile phone being the vehicle for a host of new multi-media and telecommunications applications. 3G commercial launch is scheduled for major cities in early 2007. With plans in place for the rapid deployment of advanced services, attractive packaging and pricing combined with enhanced customer service, Etisalat Misr expects to garner over 10 million subscribers within three years representing about 25 percent of the estimated market at that time.

AfghanistanIn May 2006 the Afghanistan Telecommunications Regulatory Authority (ATRA) awarded the 4th nationwide mobile (GSM) license to Etisalat. The license is valid for 15 years and is renewable. Infrastructure for an extensive network covering most of the country is currently being built, and operations are expected to commence in early 2007 in Kabul. The population is estimated at around 30 million and growing at 4.5%. There is the presence. Mobile penetration is very low.

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MobilyIt is the second mobile operator in Saudi Arabia. By the end of 2006 the subscriber base stood at 6.0 million. Mobily’s network now covers all major cities and governorates and over 14,000 km of major highways. In 2006, more than 15 value added services were introduced and the company now offers SMS, MMS, mobile Internet, stocks news, GPRS, credit transfer, voice mail, location based service, international MMS and many more. Advanced services available through Mobily’s 3G and 3.5G broadband network are also proving to be a major attraction to high end users. Mobily pioneered the BlackBerry solution in the Kingdom, initially for business and then for the individual customer. “Mobily Business” was launched to meet the requirements of a broad base of public and private enterprises. For these business customers a separate call centre has been established with its own toll free number.

Pakistan Telecommunication Company Limited (PCTL)Etisalat has 26 % stake in the largest telecommunication provider in Pakistan offering mobile, fixed line and internet services throughout the country

Atlantique TelecomEtisalat acquired 50 percent of Atlantique Telecom in April 2005, together with its 6 GSM operations located in West Africa (Benin, Burkina Faso, Togo, and Niger) and Central Africa (Gabon and Central African Republic). Later that year, the company acquired a license to enter the largest market in West Africa, Côte d’Ivoire (Ivory Coast). Service in Côte d’Ivoire was launched in July 2006. Operating under the brand name “MOOV”, Atlantique’s very innovative marketing campaign and pricing strategy produced exceptional results. In only five months of operation the subscriber base reached almost 700,000, representing a 21 percent market share.

ThurayaThuraya Satellite Telecommunications Company, in which Etisalat has the largest single shareholding, made steady progress in 2006 towards becoming a leading multi-regional mobile satellite services (MSS) provider. Already serving more than 110 countries in Asia, Africa, Europe and the Middle East, the Company is set to launch its third satellite in the second quarter of 2007. Aimed at the Asia-Pacific market, the new satellite will extend Thuraya’s coverage to nearly two thirds of the globe’s population.

CanartelEtisalat has a 37 percent investment in Canar with a renewable management agreement to implement, operate and maintain a fixed line telecommunication network in Sudan. Canar is marketing itself as young and dynamic provider of Telecommunications services using leading technologies and services covering voice, data and broadband Internet to consumers and businesses. Since the launch of service in January 2006, Canar has acquired 38 percent of the fixed voice and 44 percent of the internet market in Sudan. This base is expected to grow significantly in 2007 as the network is aggressively expanded and new products and services introduced.

ZanzibarTelecom (ZANTEL)Zanzibar Telecom Limited (Zantel) has been operating in Zanzibar, Tanzania since 1999. In 2005, the playing field changed dramatically as Zantel expanded operations to Mainland Tanzania. The impact of such an expansion was dramatic. From 100,000 subscribers in 2005, the company reached 360,000 by

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year end 2006. Zantel is continuing to exploit this unique window of opportunity to capture market share in one of the fastest growing mobile markets in Africa.

Du Business Solutions - Business Solution for Big , Small and Medium level enterprises for

implementing telecommunications solution Mobile Solutions - It is a mobile services provider including overseas services Internet and Access Services - International Private Leased Circuits, Domestic VPN, Domestic

Leased Circuits, (64 to 155 Kbps), Broadband Content Services - Pay Television options Voice Services - Hosted Voice, ISDN Voice, Analog Voice, Hosted Services, Inbound Toll Free Services Managed Services - Multi-protocol Label Switching (MPLS) VPN, Managing IT and applications

services Business Consulting Services Carrier Service - Elaborated

Carrier ServicesIncreasingly, international businesses demand faster and higher capacity bandwidths for speedy data transfer. Du’s state-of-the-art cable and satellite network offers operators and service providers a range of customizable services that span the globe. Our self-healing and high quality cables transfer data via submarine, IPLC and IP infrastructures. If you prefer wireless transfer, our satellite networks span numerous destinations.With Du’s comprehensive satellite and cable network, we can enable your data to go further, faster.Du offers the following Data Services:1. IPLC:

Highly secure and dedicated point-to-point International Private Leased Circuit services, in half and full circuit options. Connect to 40 major destinations worldwide and further than that by using our Tier-1 International partners.

2. IP Transit services:Channel your IP and internet traffic via our IP hub in Dubai. Extensive peering provides users best-in-class connectivity.

3. Ethernet services:Expand your LAN to WAN with international ethernet connectivity

4. IP MPLS services:The latest in next generation IP/MPLS services.

International ServicesIn order to meet our end-customers communication requirements and business plans, du’s Carrier Services has a network that reaches a wide range of international locations and can meet higher volume traffic requirements. du’s international network is based on the protected Falcon cable in the Gulf and Flag International Network that reaches more than 40 destinations world wide.Flag network has achieved Link Availability of more than 99.9 per cent in the past three years with Mean Time To Repair MTTR of 2.4 hours which positions the Flag Network performance as one of the leading networks.

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Voice ServicesReach, manage, routeSuccessful business depends upon clear and far-reaching communication. With du’s extensive cable infrastructure, we can give your business the right management tools to route and transfer a variety of call volume traffic.Not only do we offer broad domestic connectivity, but our network spans four continents by satellite and undersea networks to give you far reaching carrier access. With the added option of using our managed services, du’s voice service proposition will give your business the reach it needs, to go further.Our services include1. Inbound termination

du can terminate your international inbound traffic to any UAE mobile or fixed line.2. International hubbing

Using a global Tier 1 infrastructure, du can terminate traffic from other carriers to global destinations of your choice.

Economic ConditionsTo support the governments ICT Policy, UAE also supports infrastructure within the country which advances the ICT sector. Here are three prominent examples in the last five years of government sponsored infrastructure support.

Dubai Technology E-Commerce & Media Freezone (TECOM) –has the largest IT base in the region. Today it includes companies like Microsoft, Oracle, HP, and Cisco.

Dubai Silicon Oasis – Purpose-built high-technology park for the microelectronics and the semiconductor industry.

Zayed University – the first electronic governmental university in the region. The University is a women only university.

Dubai Internet CityBegun in 2000, the Dubai Internet City (DIC) provides a Knowledge Economy Ecosystem designed to support the business development of Information and Communications Technology (ICT) companies. It is the Middle East’s biggest ICT infrastructure, built inside a free trade zone. The DIC is located in an area of the Middle East where companies can easily reach and benefit from proximity to emerging markets in the Middle East, on the Indian subcontinent, and northern Africa. This area covers 2 billion people with an estimated GDP of $6.7 trillion.

ICT Global giants including: Microsoft, Oracle, HP, IBM, Dell, Siemens, Canon, Logica, Sony Ericsson, Schlumberger and Cisco along with other small foreign and local enterprises and entrepreneurial ventures have established operations within the DIC. Sectors represented in the cluster include: Software Development, Business Services, Web Based & e-Commerce, Consultancy, Sales & Marketing and Back Office Operations.

DIC provides an environment that attracts most elements of the value chain for an ICT business.

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Dubai Knowledge VillageDubai Knowledge Village (KV) is a vibrant, connected learning community that the UAE government has begun to develop with the stated objective of "developing the region’s talent pool and accelerating its move to the knowledge economy."

KV was set up to develop Dubai into a destination for education for both regional and international learners. This new education and training hub is also set up to complement the Free Zone’s other two clusters: Dubai Internet City and Dubai Media City by providing the facilities to train the clusters' future knowledge workers.

Dubai Knowledge Village provides the infrastructure for developing, sharing and applying knowledge. In addition, Dubai Knowledge Village has expanded to include the mega-campus Dubai Knowledge Universities, the first stage of which will be completed in 2006.

Charges

EtisalatLeased Line ChargesInitial charges (AED) One time only.Speeds (One End) Intra & International

(AED)Local Circuit Charges(AED)

Up to 128 Kbps 400 600256 Kbps to 512 Kbps 800 1,200From 512 Kbps to 2 Mbps 2,000 3,00034Mbps - 45Mbps 9,000 155Mbps Depends on cost of the work (AED9,000 applies) Modem Charges (AED)Modem Speed

Installation(AED)

Monthly Rental(AED)

Up to 128 Kbps 250 150256 Kbps to 2 Mbps 300 195 "Etisalat" has been the first and only provider until recently with "DU" now being the second provider in the UAE. I have the prepaid service (WASEL) with Etisalat with the following rates: (1 dirham = 100 fils = approx. $0.27 U.S.) New subscription = 165 dirhams ($45) for first year - includes 10 dirhams credit. (you pay as you go, just add credit when you need it. If you do it through internet you get 10% extra, i.e. pay 100 dirhams get 110 dirhams credit) Yearly renewal = 100 dirhams ($27) includes complimentary call waiting service after first year.

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Any call within the UAE (mobile or landline) = roughly .5 fils/second (around $0.08/minute) **all incoming calls (local & international) are free. International calls = charged at standard IDD rates (same as landline rates) Video calls = 75 fils/minute ($0.20/min) Local SMS = 18 fils ($0.05) International SMS = 60 fils ($0.16) Local MMS = 45 fils/50kb ($0.12) International MMS = 1.80 dirhams/50kb ($0.50) Mobile TV = 39 dirhams ($10.60) per month - unlimited usage Data = 1 fil per kb = 10.24 dirhams {$2.78} per MB

Useful ParametersUAE - $0.157 per min a. 100% white CLI route; both Mobile & Landline! Direct Interconnect with one of the UAE operators b. ASR = 40% / ACD = 4 mins

Top Incoming and 0utgoing DestinationsShould presumably be Mumbai, Kerala, and Goa

Top 5 Incoming Routes from India (FY 2001-02) Rank Destination Minutes (in millions)1 United States 1,3542 United Arab Emirates 365

3 United Kingdom 1014 Saudi Arabia 1875 Canada 122Top 5 contribute 80 percent of India’s incoming traffic Source: www.telegeography.com

Top 5 Outgoing Routes from India (FY 2001-02)

Rank Destination Minutes (in millions)

1 Saudi Arabia 89.52 United Arab

Emirates89

3 United Arab 54.6

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Emirates4 United Kingdom 54.35 Singapore 26.1Top 5 contribute 54 percent of India’s outgoing traffic Source: www.telegeography.com

India’s Traffic Balance Minutes (in mn) 2002–

03*2001–02 2000–01 1999–00

Incoming 2,900 2,533.60 2,161.40 1,772.50Outgoing 800 586.4 527.1 473.3Surplus (Deficit) 2,100 1,947.20 1,634.30 1,299.20Total Volume 3,700 3,120.00 2,668.50 2,245.80Surplus = Incoming – Outgoing Source: www.telegeography.com

Market SharesTraffic to the UAE past five years

Year Incoming Traffic (minutes) Growth2003-2004 400776058 2004-2005 436587963 9%2005-2006 503346002 15%2006-2007 505379664 0% Year Outgoing Traffic(minutes) 2000-2001 44148182 2001-2002 54569154.07 24%2002-2003 74621259.26 37%2003-2004 100597438 35%2004-2005 141638775 41%2005-2006 204346041 44%2006-2007 436226152 113%Source : VSNL

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VSNLs Market Share

Top ILD Service Provider Rank Company/Group Revenues

(in Rs crore) Growth

FY 2004-05 FY 2003-04

(in %age)

1 VSNL 2,080 2,718 -23.52 Bharti Infotel 810 505 60.43 Reliance

Infocomm655 288 127.4

4 Data Access* 285 835 -65.9 Total 3,830 4,346 -11.9

* The company was very active till July and August. Data Access has been served notice for suspension by DoT

Top ILD Service Providers

Company Revenue(in Rs crore)

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1. VSNL 4,562.50

2. Data Access 584

3. Bharti 298.36

Source : www.voicendata.com

Top ILD (Voice) Service Providers

Company Revenue in FY 2002-03 (in Rs crore)

1. VSNL 3,709.70 2. Data

Access584

3. Bharti Telesonic

298.36

Total 4,592.06 Source: www.voicendata.com

Top ILD (Voice) Service Providers

Company Traffic in (mn minutes)

1. VSNL 3,000 2. Data Access 470 3. Bharti 230

Total 3,700 Source:www.voicendata.co

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m

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Source: www.voicendata.com

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INTERNET

Population, Subscriber numbers, Teledensity, PCYo Mobile o Fixedo Internet

Growth of Subs and projection for next 3 yearso Mobileo Fixedo Internet

Details of competition and regulation, Number of Carriers, their profiles, market share etc

Top outgoing and Incoming destinations and charges

Second Part

Number of carriers interconnected with VSNL/VSNLI Capacity existing with VSNL Traffic from and to India

o Traffic handled by VSNLo VSNL’s market share – incoming and outgoingo Traffic from competition to this geographyo ASR, ABR, ACDo Circles & Operators in India originating traffic to the geography

Third Part

Cable capacity costs, DCME etc Rates for India termination, margins etc Rates for termination of outgoing traffic, LCR, LCR routes, Capacities etc Opportunities for ROW traffic swaps

Competition : Du Subscriber base Tariff Rates Retail Tariffs

Our rate to UAE Access operators rate to UAE

IP Telephony

EMaar group

Mass reaction to DU

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News1. Only Du and Etisalat will be allowed to offer VoIP services.2. Du launches international video calls3. Du reached a customer base of 4,00,0004. Etisalat has a link with Tawasul Telecom of Kuwait to provide the MPLS services5.

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