Etisalat ready for Dh3bn investment

Etisalat plans to spend between Dh2 billion and Dh3 billion a year on infrastructure in the UAE.

Nasser bin Obood, the acting chief executive of Etisalat, and Osman Sultan, the chief executive of du. Andrew Henderson / The National

plans to spend up to Dh3 billion a year on infrastructure in the UAE, including the roll-out of a fourth-generation mobile network to carry video.

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Capital expenditure on its UAE networks will be between Dh2bn (US$544.5 million) and Dh3bn a year, said Nasser bin Obood, the acting chief executive of Etisalat.

The spending would be focused on mobile networks, data cabling and IT systems, he said.

The operator's 4G mobile network would be launched "very soon", starting "with the main cities, Dubai, Abu Dhabi, Al Ain, Sharjah," Mr bin Obood said.

, the chief executive of Etisalat's rival du, said that his company was also looking to launch 4G services.

"Our trials have been completed. But there's no date to be announced now," Mr Sultan said. "Hopefully this year, but it's not a firm commitment."

Mr Sultan declined to specify du's planned infrastructure investment this year. Both executives were speaking on the sidelines of the Abu Dhabi Telecoms CEO Summit.

Philip Brazeau, who heads the telecommunications practice at the Middle East law firm Al Tamimi, said Etisalat's investment in a 4G network would improve services such as mobile video.

"The telcos which will be the most successful in the long term are those that are going to invest," he said. "To see Etisalat making that investment indicates that they're building for the future requirements of the community.

"4G is your iPhone-like device with video capabilities, with the ability to do much what your computer does today."

Mr Brazeau said the value of Etisalat's planned investment was "pointing in the right direction". However, he added that "it's not going to be the end of their investment".

Irfan Ellam, a telecoms analyst with Al Mal Capital, said the planned investment was in line with his projections, into which he had factored Dh2.26bn of capital expenditure this year.

He added that Etisalat's total capital expenditure, including in its operations outside the UAE, was forecast to approach Dh20bn over the next five years. "I am projecting Dh19.45bn for the next five years, with Dh4.6bn in 2011 and Dh3.9bn in 2012," he said.

Jorg Erlemeier, the Middle East head of Nokia Siemens Networks, which has worked with Etisalat, said increased demand for data capacity made such investments necessary.

"Lifestyles in today's world demand huge volumes of bandwidth as there is a desire to be connected anywhere and any time," he said. "In the near future, operators need to ensure the best broadband experience, and this can be achieved through investment, primarily in 3G and 4G.

This is excellent news for mobile customers and the UAE in general," Mr Erlemeier said.

News of the planned investment comes as Etisalat and du prepare to face a new era of competition.

Under a government ruling, the two operators will soon start sharing the fixed-line infrastructure, which will mean they compete to provide landline and broadband services across the UAE. Mr bin Obood said this would "most probably" be implemented by the end of this year.

"It is going fine. Testing is going on," he said.

"We are placing all our plans on the infrastructure-sharing agreement, when it comes to the wired infrastructure, going nationwide," Mr Sultan said. "We will pay to access this infrastructure, which will be invested by Etisalat"

Further competition could be coming. At present, only Etisalat and du provide mobile phone services in the UAE.

But Majed al Mesmar, the deputy director general of the Telecommunications Regulatory Authority, said that the Government may consider granting more licences.

"Our commitment to the World Trade Organisation is to consider liberalising the market by 2015," Mr al Mesmar said.