Shuaa Capital's top ten telecom predictions for 2010

Shuaa Capital, the UAE's largest investment bank, released its 2010 vision plan today, chockful of handy financial information in a tidy PDF file.

In the report, the company detailed its outlook for the UAE's telecommunications sector, briefly analysing how Etisalat and du performed in 2009 and offered its estimates for how both companies should fare in the future.

It also notably offered a quick, top 10 list of predictions it expects to happen in the UAE telecom sector. While it may not have the same pizazz as a late night television show, it is still an interesting read.

Check out Shuaa's predictions and some thoughts on them after the jump.

They are, as follows:

1. In the near future, population growth will no longer be a tailwind for UAE telecoms as was the case until 2008.

2. Mobile data and other value-added services, broadband internet, triple-play services through fiber-to-the-home will be the growth drivers of the sector.

3. Introduction of mobile number portability (MNP) is expected by Q2 10. In other markets, notably in neighbouring Saudi Arabia, MNP has not been a needle mover for various reasons. Based on anecdotal evidence, customers in KSA willing to switch found it less of a hassle to buy a new SIM card from an alternative operator than going through the tedious process of transferring their existing line. Will the UAE prove to be different?

4. Since 2007, UAE mobile sector is fully competitive. This year, we foresee more competition for fixed services. Infrastructure sharing is on the agenda, with a gradual implementation expected in the second half of 2010, which will allow operators to compete in each others territories for fixed services.  

5. The TRA is expected to unveil soon a VoIP (voice over Internet protocol) policy. We believe that the TRA will allow VoIP services only through the two licensed telecom operators, and not through other players such as Skype. This will allow both Etisalat and Du to offer their customers VoIP plans for international long distance calls at a slight discount to current rates.

6. MNP, Infrastructure sharing, VoIP... The TRA's and operators' plate appears full for 2010. Expect delays in the implementation of these initiatives.

7. We expect the UAE telecom sector to remain a two-player market for the foreseeable future. We don't expect a third mobile operator anytime soon. The UAE telecom sector will remain attractive for investors as one of the few remaining duopolies.

8. We don't expect a change in foreign ownership rules in UAE telecom sector in 2010.

9. We don't expect a change in Etisalat's 50% royalty rate in 2010.

10. We forecast the UAE telecom sector to deliver another year of mid-single digit revenue growth in 2010. Specifically, we forecast Etisalat's UAE operations to achieve low single digit revenue and EBITDA growth. On the other hand, we project Du to deliver 18 per cent revenue growth and 38 per cent EBITDA growth.

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After reading all of these, none of these predictions are really that surprising. We've been following the majority of these stories for the better part of last year. The two points that will shift the game a little bit are points four and five on mobile number portability (MNP) and VoIP.

While these are not really expected to completely fuel a company's revenue growth, they are still significant developments (when they actually do happen) that will take the UAE's telecoms industry into sync with the rest of the developed world, which has offered these things for decades.

But the question everyone wants to know is when this will happen. As my colleague Tom Gara noted in a prior blog post, VoIP has been on the agenda for years, so it's really anyone's guess when the TRA will officially let it become fully accessible in the UAE. Ditto for MNP.