Strengths And Weaknesses Of Etisalat

Emirates Telecommunication Corporation – Etisalat was founded in 1976 as a joint-stock company between International Aeradio Limited, a British Company, and local partners. In 1983 the ownership structure changed – United Arab Emirates government held a 60% share in the company and the remaining 40% were publicly traded.

In 1991 the UAE central government issued Federal Law No. 1, which gave the corporation the right to provide the telecommunications wired and wireless services in the country and between UAE and other countries. It also gave the firm the right to issue licenses for owning, importing, manufacturing, using or operating telecommunication equipment. This practically gave Etisalat both regulatory and control powers, which completed the monopoly of the telecom giant in the UAE. In order to safeguard the country’s economic development, the law made provisions for the development of the telecommunication sector in the country.

The increase of exchange lines from 36,000 in 1976 to more than 737,000 in 1998 was one of the important indicators of Etisalat network’s growth and development.

An important milestone was Etisalat’s commencement of international operations in January 2001, when under the brand name of Ufone it started operating out of Islamabad.

Today Etisalat stands 140th among the Financial Times Top 500 Corporations in the world in terms of market capitalization, and is ranked by The Middle East magazine as the 6th largest company in the Middle East in terms of capitalization and revenues. The Corporation is the largest contributor outside the oil sector to development programmes of the UAE Federal

Etisalat has also won accolades from across the region for its nationalization programme

Etisalat Building in Abu Dhabi, UAE

In addition to its telecommunication services provider and carrier units, Etisalat incorporates a number of additional non-telecom business units under the umbrella of Etisalat Services Holding LLC. These units support the company’s operations and even provide services to other operators and organizations, namely: training and consultancy services(Etisalat Academy, SIM/smart card manufacturing and payment solutions (Ebtikar), data clearing house services (EDCH), peering/voice and data transit (Emirates Internet Exchange – EMIX), call center

Etisalat is a major investor in Thuraya (34.5%), a satellite geo-mobile communication systems provider.

In 2006 Etisalat started a major restructuring program that resulted in the de-merger of many of its non-core business units operating under the telecom’s centralized and direct management; core services were consolidated and streamlined, reflecting the company’s shift from a technology-driven telecom to a customer-focused services provider. As part of the program, Etisalat has launched a re-branding campaign, releasing a new corporate logo and identity in May 2006. The restructuring culminated in the incorporation of Etisalat Services Holding LLC, which as of 2008 oversees the operation of Etisalat’s non-telecom business units with huge success stories .

Etisalat International Investments

Etisalat International Investments is the business unit of Etisalat that operates outside the UAE and manages the corporation’s stakes in telecommunications carriers in Afghanistan, Benin, Burkina Faso, the Central African Republic, Gabon, India, Indonesia, Iran, the Ivory Coast, Egypt, Niger, Nigeria, Saudi Arabia, Sudan, Tanzania, Togo, Sri Lanka and Pakistan.

The International Investments unit also manages Etisalat’s minor stakes in other telecommunications services providers, such as Sudatel (a mobile, fixed and Internet services provider in Sudan), and Qtel (Qatar-based telecommunications services provider).

Mobily – Saudi Arabia

One of Etisalat’s first international investments was the bid to become the second mobile services operator in Saudi Arabia. Etihad Etisalat, a consortium led by Etisalat, won the 2G GSM license by offering USD $3.25 billion. Currently operating under the brand name Mobily, Etihad Etisalat offers Saudi Arabia subscribers conventional and 3.5G mobile telephony services, and has floated shares on the Saudi stock market.

PTCL – Pakistan

Among the acquisitions of Etisalat in 2005 was a 26% management stake in Pakistan Telecommunications (PTCL) that was put on sale by the Government of Pakistan as part of a large privatization initiative. In order to outbid competitors (which included Singapore Telecommunications and China Mobile), Etisalat offered USD $2.56 billion for the stake. According to some analysts, the telecom has overpaid, as the bid went far beyond the estimated USD $2 billion value of the package.

Etisalat Egypt

In July 2006, a consortium led by Etisalat was granted the rights to develop Egypt’s third mobile network, with a winning bid of 16.7 billion Egyptian pounds (EUR €2.29 billion euro). The venture, Etisalat Egypt, competes with existing service providers Vodafone and Mobinil. On September 12, 2006, it was announced that the network would be built by Ericsson of Sweden, and Huawei of China, at a cost of approximately USD $1.2 billion.

In 2007, at the Comms MEA Awards ceremony Etisalat was presented with the ‘Best New Entrant’ award for its Egyptian operations. Award winners were selected by a panel of experts from KPMG, the Arab Advisors Group and Oliver Wyman, Dubai.

Canar – Sudan

Etisalat is one of the founding partner companies of Canar Telecom, a fixed-line telecom services operator. In September 2007 Etisalat has raised its stake in Canar from 37% to 82% at an estimated cost of AED 584.17 million (USD $159 million).

Canar was launched on November 27, 2005. The operator is reported to use NGN and Wireless Local Loop (WLL) technologies for its voice, data, internet and multimedia services. Canar is one of the first operators in Africa to use an NGN network core.

EMTS – Nigeria

Etisalat signed an agreement to acquire 40% of and manage Emerging Markets Telecommunications Services, Nigeria’s fifth GSM operator. It is now operating with about 5 million Subscribers, and recently signed an agreement with Main One cable company to launch one of the first major broadband service in Nigeria.

Zantel – Tanzania

In January 1999, Etisalat acquired a stake in Zanzibar Telecom (a Tanzania-based mobile operator) for USD $2.4 million (AED 8.8 million) and has subsequently increased the stake by 17% in July 2007.

Since then, Zantel has introduced telcom services that are typical for the African region, such as mobile banking services for customers without access to banking facilities (Zpesa Mobile Banking).

Atlantique Telecom/Moov – West Africa

In Africa, Etisalat acquired 50% of Atlantique Telecom’s shares in April 2005. Based in the Ivory Coast, AT owns mobile operators in Benin, Burkina Faso, Togo, Niger, Central African Republic, Gabon and Ivory Coast. In 2007, Etisalat increased its shares in AT to 70% and again in May 2008, to 82%. AT group subscribers totaled 2.9 million at the end of 2007, which is a 107% increase from the previous year.

Ivory Coast: Moov, is currently Ivory Coast’s third-largest cell-phone operator with a 1.5 million customer base. In 2008 Moov Ivory Coast introduced the first nationwide cell-phone coverage, based on Thuraya satellite access technology. It is the first time that such a service has been offered in sub-Saharan Africa, outside South Africa. It was expected that the expanded coverage introduced by the satellite service would help boost Moov’s customer base and even overtake France Telecom’s unit Orange as the top telecom services provider in the country.

Benin: Etisalat operates in Benin under the Moov brand. On 24 October 2007 the government of Benin has reassigned Telecel’s operating license to Etisalat. In February 2008, His Excellency Dr. Boni Yayi, President of Benin, honoured Etisalat chairman, Mohammad Hassan Omran during a ceremony to celebrate Etisalat’s efforts in developing and promoting the telecommunications sector in Benin.

XL Axiata – Indonesia

Indonesia-based mobile services operator PT XL Axiata (formerly PT Excelcomindo Pratama) is Etisalat’s first acquisition in the Far East. In December 2007 Etisalat took a 15.97% stake after paying USD $438 million (AED 1.6 billion). At the time of the acquisition XL had 15 million mobile subscribers.

Etisalat – Afghanistan

Etisalat Afghanistan is a newly established GSM operator, 100% owned by Etisalat. It was established in May 2006 after the UAE telecom won the license to operate the fourth mobile services provider in the Islamic Republic of Afghanistan. Etisalat’s bid for the license was USD $1.2 billion (AED 4.4 billion) and services were launched in August 2007. Etisalat Afghanistan operates out of Kabul and as of March 3, 2010, the company has achieved 24 per cent market share in 27 provinces of Afghanistan.

Etisalat – Sri Lanka

Etisalat acquired the Sri Lankan Operation of Millicom International Cellular (MIC), Tigo (Sri Lanka) on 16 October 2009. The acquisition was completed with a total enterprise value of 207 Million US$, out of which 155 Million US$ was in cash.

Tigo (Sri Lanka) under the then brand name CELLTEL started operations in June 1989 on a Motorola TACS system and was the first cellular operator in Sri Lanka as well as South Asia. In January 2007, Millicom replaced the local CELLTEL brand with Tigo, their international brand. In February 2010, Tigo was rebranded as Etisalat.

It competes with international operators like Dialog Telekom (Telekom Malaysia), Mobitel (Sri Lanka Telecom), Hutch (Hutchison) and Airtel (Bharti Airtel), using technologies GSM/EDGE and hopes to launch UMTS/HSDPA services over 900/1800 and 2100 MHz in 2011.

Etisalat – India

In 2009 Etisalat has announced that its Indian unit, erstwhile Swan Telecom (owned by Dynamix Balwas Realty and Reliance Communications), headquartered in Mumbai, is renamed to Etisalat DB Telecom India Pvt. Ltd Telecom Renamed Etisalat Telecom India Pvt. Ltd. The business unit has been awarded Unified Services Access License in 15 circles – Andhra Pradesh, Delhi, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Mumbai, Punjab, Rajasthan, Tamil Nadu (including Chennai), Uttar Pradesh (East), Uttar Pradesh (West), Madhya Pradesh and Bihar. In April 2010 Etisalat began signal testing in Chennai [IND 922], Delhi & NCR [IND 913], Maharashtra & Goa [IND 919], Mumbai [IND 916] and Gujarat[IND 914]. In May 2010, Etisalat was in talks to buy 25% stake in Reliance Communications, but the deal was not finalised.

In 2010, following the $39 billion 2G spectrum scam, Etisalat DB, the Indian subsidiary of the company, was stopped from buying a stake in a Chennai-based company due to objections raised by the India’s home ministry(MHA). Etisalat DB was not allowed to buy back the 5.27 per cent stake held by Chennai-based Genex Exim Ventures since the home ministry raised objections based largely on security concerns. The MHA had pointed out four issues that needed to be resolved before allowing the company to come into Etisalat DB, a company that got scarce 2G spectrum at allegedly throwaway prices, First, vice-chairman Shahid Balwa should not be involved in the operations of the company in any capacity, because of his connections with underworld don Dawood Ibrahim, second, the MHA raised objections about the commercial relationship between the Dubai-based Etisalat Group and China’s Huawei. The MHA suspects, Huawei has links with China’s People’s Liberation Army – the country’s military organization of all land, sea, strategic missile and air forces – and has the capacity to manipulate equipment supply, third, it raised objections about Etisalat’s presence in Pakistan and it’s connection with Pakistan’s intelligence agency ISI. Etisalat owns a 26% stake in Pakistan Telecommunications and has a subscriber base of 3 million in Afghanistan and fourth, the MHA has also expressed concerns about the telecom surveillance software Etisalat had used in a Blackberry service it had introduced in the UAE and recommended that the company should not be allowed to offer Blackberry services in India.

b) Social; technological: Etisalat

Etisalat UAE is headquartered in Abu Dhabi and includes three regional offices – Abu Dhabi, Dubai, and Northern Emirates.

Etisalat Company is owned by the UAE government and it is stipulated law that state, with seven out of 11 of the Board of Directors being government representatives, including the Chairman.

Abu Dhabi Region

Key positions:

Etisalat Chairman: Mohamed Hassan Omran

Etisalat A/CEO: Nasser Bin Abood

Senior Vice President Marketing: Khalifa Al Forah Al Shamsi

Group Senior Vice President – corporate Communications: Ahmed Bin Ali

Corporate Governance

The General Assembly

The General Assembly is composed of all shareholders of the Corporation. The General Assembly is entrusted with approving the Board’s Annual Report on the Corporation’s activities and financial position during the preceding financial year. The Assembly is also entrusted with approving the report of the external auditors, discussing and approving the balance sheet and the profit and loss account for the previous financial year, appointing external auditors and approving the Board’s recommendations regarding the allocation of profit. The General Assembly exercises all powers of the Corporation within the limits of the law and the Articles of Association.

The Board of Directors

The Emirates Telecommunications Corporation (Etisalat) is managed by a Board of Directors presided over by the Chairman and consists of eleven members, including the Chairman, seven of whom are appointed by Presidential Decree to represent the Federal Government of the United Arab Emirates, and the remaining

Four elected by the 40% non-government shareholders of the Corporation. The term of the Board of Directors is three years, as applicable to each group of members according to the date of their appointment or election.

The Board of Directors carries out the Corporation’s business and for that purpose, exercises all powers of the Corporation, except those reserved by Law or the Articles of Association for the General Assembly of the Corporation.

The Executive Committee

The Executive Committee is appointed by the Board of Directors in accordance with Section 20 of the Articles of Association. It is empowered to take decisions on behalf of the Board and/ or to make certain recommendations to it concerning particular matters. The Executive Committee’s functions and powers include organizational matters of the Corporation (such as overseeing statutory, organizational and employment matters and

Corporate performance), planning and development (overseeing development plans and projects, and approval of the budget prior to submission to the Board), operations (reviews efficiency of service and lays down

policies concerning investments of surplus funds), projects (sets the terms for the project agreements, approves relevant tenders over AED 50 million, and approves project overruns and variations over AED 10 million), procurement (approves purchases over AED 50 million), and investments (including international Investments and expansion projects).

The Audit Committee

Communicate

Entertain

Inform

c) Internet services

The number of Etisalat’s Internet subscribers reportedly stands at 1.02 million.[42]

Some of the Internet services for home users that Etisalat offers include:

3G Mobile Internet access

Broadband Internet services (Al Shamil[43] and eLife[44])

Prepaid and post-paid dialup Internet access

Etisalat also operates iZone, a system of Wi-FI hotspots in central locations, such as shopping malls, restaurants, and sheesha cafes. iZone can be accessed by either purchasing prepaid cards (AED 15/hour, USD $4.5/hour), or if using an existing account with the operator (AED 3/hour for dial-up account holders, or AED 10/hour for broadband users).

Dial-up and ISDN Internet access services are billed by the hour, whereas the domestic and residential cable and DSL connections have a fixed monthly rate depending on speed. Other Internet links, aimed at business users, have traffic utilization plans and relatively high rates when exceeding the allocated bandwidth quota. This has caused bad publicity for Etisalat and is a major source of criticism.

Internet censorship

Page Blocked Notice

Etisalat operates an Internet content filtering system that blocks access to web resources. The web resources are claimed to be controversial or offensive (i.e. sexually explicit content, certain political and religious websites, anonymizers and proxies) or harmful (i.e. numeric IP addresses, known phishing or malicious websites, botnet command servers). The use of content filtering is mandated by the Telecommunications Regulatory Authority (TRA) of the United Arab Emirates.

The type of content that is restricted by Etisalat includes:

Pornography, nudity and sexually explicit content.

The entire Israel country code top-level domain (.il)

Certain media-sharing websites

Anti-Islamic websites.

Websites criticizing the United Arab Emirates (such as UAEprison and Arab Times)

Anonymous proxy sites (such as vtunnel, pzeg, etc.), Gay and Lesbian Rights websites (such as Gaydar, Mogenic etc.)

Numerical IP address links (for example, http://10.11.1.1/),Voice over IP services providers’ websites (such as Skype, Vonage)

There are claims that Etisalat breaks the rules of net neutrality by throttling peer-to-peer, gaming and other types of network traffic in order to reduce the load on its oversubscribed international links. The effect of this interference is most noticeable during weekends or periods of high network use.

The overall efficiency of the country-wide content filtering is unclear, as many of the technologically savvy users have discovered tools and methods to bypass the content filter, such as using Tor.

BlackBerry

In July 2009, Etisalat pushed an update to BlackBerry devices operating on the telecom’s national network, citing performance improvements. However, it was later discovered that the update contained eavesdropping software, developed by the US-based software development company SS8, which specializes in electronic surveillance. It is reported that the software enabled the company to monitor and forward communications on BlackBerry devices to their servers.[48][49]

Research in Motion, BlackBerry’s developer, acknowledged[50] that the patch was a form of spyware, and issued a removal patch on July 20.

On December 27, 2009, both Etisalat and Du (telco) have been mandated by the UAE telecom regulator to start filtering BlackBerry users’ web access and block illegal content.

Due to concerns with the security and the provisioning of legal interception for Blackberry non-voice services, on 1 Aug 2010, the Telecommunication Regularity Authority of the UAE instructed Etisalat that all Blackberry e-mail, internet and messenger functions must be suspended on 1 Oct 2010

d) The Operating Structure of the Corporation

In 2009 Etisalat implemented a group structure to manage its international expansion strategy, protect value from the Corporation’s United Arab Emirates operations, secure value creation from its seventeen international operations,

and to gain the trust of its stakeholders by putting in place a solid structure and governance and adherence to best practices.

At the level of the United Arab Emirates, the Group organization structure features two autonomous Operating Units: Etisalat UAE Unit (which is entrusted with provisioning Licensed Telecom Services in the United Arab Emirates);and the Etisalat Services Unit (a wholly owned holding company entrusted with providing certain non-core, non-telecom services to the Corporation, as well as to third parties). The Group exercises and sets its various activities and responsibilities and sets its key corporate policies, prepares plans, and monitors the operational and financial performance of its operating companies, and reports the same to the Board of Directors and the Executive Committee on a regular basis.

e) Consolidated income statement before the year ended 31 December 2009

Consolidated statement of comprehensive income

a) DU History

The Emirates Integrated Telecommunications Company (EITC) is a telecommunications company in the United Arab Emirates. Although Emirates Integrated Telecommunications Company is its legal name, it was commercially rebranded as du in February 2006. The company has invested AED 2.4 billion in 2009 and added 1 million active mobile subscribers in 2009, bringing its subscriber base to 3.48 million.

du offers fixed and mobile telephony, broadband connectivity and IPTV services to individuals, homes and businesses, and carrier services for businesses.

On February 11, 2007, du launched its own mobile service with call tariffs almost identical to those of Etisalat, thus eliminating any possibility of price competition between the two providers. Subscribers to du mobile services can be identified by the dialing prefix 055

b) Social; technological: DU

Chief Executive Officer – Osman Sultan

Chief Financial Officer – Mark Shuttleworth

Chief Commercial Officer – Farid Faraidooni

Chief Technology Officer – Yatinder Mahajan

Chief Human Resources and Corporate Services Officer – Fahad Al Hassawi

Chief Strategy and Investments Officer – Raghu Venkataraman

Chief Corporate Affairs Officer – Ananda Bose

du is committed to operating according to global best-practice throughout all aspects of its business. While the company has continued to achieve exceptional results, the world has witnessed significant challenges against a backdrop of the financial crisis. The need for commitment to good governance has never been greater. du has operated under a strong corporate governance culture, since the company was founded.

The board of directors

Leading our corporate governance efforts is a Board of nine Directors, chaired by Ahmad Bin Byat, which meets on a quarterly basis. Meetings are structured to allow open discussion. All directors participate in discussing the strategy, trading and financial performance and risk management of the Company. In line with ESCA and international guidelines, the roles of Chairman and Chief Executive

du board and committees

In addition, the company has a number of Board Committees, including the Audit & Compliance Committee, Remuneration and Nomination Committee, and an Investment Committee, which are responsible for monitoring, reviewing and making recommendations for their respective areas.

audit & compliance committee

The Audit & Compliance Committee consists of three directors and meets quarterly. The internal audit function of du has a direct reporting line into the Audit & Compliance Committee. This committee is responsible for reviewing du’s results and financial statements, reviewing the activities of internal auditors and monitoring compliance with statutory requirements.

Audit & compliance committee members:

Ziad Galadari (Chairman)

Younis Al Khoori

Fadel Al Ali

Remuneration and nomination committee

The Remuneration and Nomination Committee meets as required and consists of three directors and is responsible for the assessment and recommendation of policy on executive remuneration and packages for individual executive directors.

Remuneration and nomination committee members:

Waleed Al Muhairi (Chairman)

Abdulhamid Saeed

Abdulla Al Shamsi

Investment committee

The investment committee, which is not an ESCA requirement, consists of four directors. Its main function is to evaluate the company’s investment plans to ensure that shareholders will see an appropriate return on investment. It meets a minimum of four times per year.

Investment committee members:

Eissa Al Suwaidi (Chairman)

Ahmad Bin Byat

Jassem Al Zaabi

Fadel Al Ali

c) Key management decisions -DU

Censorship: Unlawful websites

Users who tried to access a blocked web page were initially redirected to du’s first block page. As rendered in the Opera web browser

In March 2008, Du began selectively blocking VOIP traffic, preventing customers from using the computer-to-phone functionality of VOIP systems. The blocking is justified on the grounds that computer-to-phone VOIP services are illegal under UAE telecom law. Both of the telecoms providers in the UAE derive a large proportion of their income from expatriates making expensive international calls to their home countries.

However, a specific exemption in the telecom law permits the use of VOIP for computer-to-computer calls, and so it is still possible to access VOIP websites, download VOIP software, set up accounts and use the software to make computer-to-computer calls, both audio and video. If a computer-to-phone call is attempted, it will typically fail to connect unless a VPN is used (see below).

On April 14, 2008, du started instituting the same widespread censorship of the web that has been practiced by Etisalat for some years. Any attempt to access content deemed ‘inappropriate’ by the UAE censor results in a ‘blocked’ page. As well as pornography, blocking includes blogs, forums and news articles that are critical of the UAE, as well as a proportion of sites that seem to be accidentally blocked as they have no obviously In March 2008, Du began selectively blocking VOIP traffic, preventing customers from using the computer-to-phone functionality of VOIP systems. The blocking is justified on the grounds that computer-to-phone VOIP services are illegal under UAE telecom law. Both of the telecoms providers in the UAE derive a large proportion of their income from expatriates making expensive international calls to their home countries.

However, a specific exemption in the telecom law permits the use of VOIP for computer-to-computer calls, and so it is still possible to access VOIP websites, download VOIP software, set up accounts and use the software to make computer-to-computer calls, both audio and video. If a computer-to-phone call is attempted, it will typically fail to connect unless a VPN is used (see below).

On April 14, 2008, du started instituting the same widespread censorship of the web that has been practised by Etisalat for some years. Any attempt to access content deemed ‘inappropriate’ by the UAE censor results in a ‘blocked’ page. As well as pornography, blocking includes blogs, forums and news articles that are critical of the UAE, as well as a proportion of sites that seem to be accidentally blocked as they have no obviously controversial content.

d) Operational changes-DU

Achieved record revenues of AED5.3 billion and profits of AED528 million in 2009

Added over 1 million active mobile subscribers, bringing total to 3.5 million at year end

Exceeded mobile market share target, reaching 32% in third year of operation

Invested AED2.4 billion on network and infrastructure development in 2009 to enhance capacity and coverage

Continued to provide innovation, value for money and performance to all our customers

Well positioned to achieve long term growth and sustainable profitability

Listed on the Dubai Financial Market (DFM) under the ticker code: du

Date of listing: 22nd April 2006

Net profit at 31st December 2009: AED528mln

Earnings per share: 0.066

du is an integrated telecom service provider, offering customers throughout the UAE the best in quality, innovation, and competitive pricing. During 2009 it added more than 1 million active mobile subscribers, proving that we have established ourselves as the operator of choice for the majority of new subscribers in the UAE market.

DU offered fixed and mobile telephony, broadband connectivity and IPTV services to individuals, homes and businesses, and carrier services for businesses.

du is a rapidly-growing enterprise, with close to 2,000 staff, from over 60 countries, working to enhance and expand our range of service offerings. This wide variety of personnel allows us to mirror the rich cultural diversity of our nation, while being able to serve our customers in a number of different languages.

Over 50% of senior management team and customer-facing staff are UAE nationals. Du is committed to provide opportunities for quality talent in a cosmopolitan working environment.

e) Financial -DU

Full Year 2010 results analysis

Revenue Growth (AED Millions) Mobile & Fixed Subscriber Growth (Thousands)

Press Release

du Announces Full Year 2010 Results

– Revenues exceed AED 7 billion with a 32% increase for the full year 2010

– Net profit before royalty exceeds AED 1.2 billion with a 132% increase

Dubai, 3 March 2011 – Emirates Integrated Telecommunications Company PJSC (“du”) today

announced its financial results for the fourth quarter and full year 2010, showing record revenues,

and continued healthy customer additions.

Highlights for the full year 2010:

856,000 net active1 mobile customers added during the year, taking the total at yearend to 4.3 million.

Revenues reached AED 7,074 million, a 32% increase versus 2009 (AED 5,339 million).

Gross margin grew by 31% year on year to AED 4,601 million versus 2009 (AED 3,507million).

EBITDA2 grew 90% to AED 2,018 million versus 2009 (AED 1,064 million).

Net profit before royalty increased by 132% year on year to AED 1,226 million versus2009 (AED 528 million).

Net profit after royalty increased to AED 1,310 million from AED 264 million in 2009,following the announcement by UAE Federal Government that the royalty rate for the Company commences from 1 January 2010 and that royalty rate for the year ended 31December 2010 is 15%.3million).

Task – 3

Etisalat STRENGTHS

Etisalat is a monopoly shared by DU in telecommunications which allows no competition whereby maximizing profits

Emirates Telecommunications Corporation (Etisalat) is majority-owned by the Ministry of Communications (60%), with the remaining shares publicly-traded on the national stock exchange and held by UAE nationals. This report outlines the company’s recent activities and corporate strategy

Etisalat is a company established worldwide

Etisalat is well developed company with wider penetration in UAE

Etisalat weakness

Etisalat investments globally is not direct hence they don’t have direct control over these investments; hence they only get dividends which means they are a passive player not an active player. This will limit etisalat’s growth to advance in terms of commercials

Etisalat is a monopoly hence in terms of competition, it is not customer orientated in terms of call price , services like VoIP etc

The UAE telecom market is highly restricted, with both major players being largely government owned.

There is little real competition, with the choice of provider generally determined by geographic location.

Etisalat typically has a monopoly on certain locations , As a result, contrary to the UAE’s aspirations to be a major global IT hub, broadband internet provision in the UAE is among the slowest and most expensive in the world, with a current maximum available speed of 30 Mbit/s.

DU STRENGHTS

DU is a monopoly shared by Etisalat in telecommunications which allows no competition whereby maximizing profits

EITC is 40 percent owned by the UAE federal government, 20% by Mubadala Development Company, 20% by TECOM Investments and 20% by public shareholders. It is listed on the Dubai Financial Market (DFM) and trades under the name du.

DU is well formed and managed according to industry standard practices

Du has a resource pool of professional which aloows them to adopt the latest trends in market in terms of technology

Du is backed federal government of UAE and Dubai government investment body hence capital is not a limitation to expand its horizon

DU weakness

DU is a new developing company which is currently stabilizing on its services and expanding to new horizons

Currently DU is not a global presence company rather it is restricted to UAE

DU is a monopoly hence in terms of competition, it is not customer orientated in terms of call price , services like VoIP etc

The UAE telecom market is highly restricted, with both major players being largely government owned.

There is little real competition, with the choice of provider generally determined by geographic location.

du typically has a monopoly on free zones , As a result, contrary to the UAE’s aspirations to be a major global IT hub, broadband internet provision in the UAE is among the slowest and most expensive in the world, with a current maximum available speed of 30 Mbit/s.