The latest update on the telecoms market of the United Arab Emirates (UAE) contains new data on the size of the country’s mobile telephony market as of mid-2009. It also includes data on the growth of the country’s fixed-line, internet and broadband subscriber markets in the first half of 2009.

The most recent figures published by the UAE’s two network operators, Emirates Telecommunications Corporation (Etisalat) and Emirates Integrated Telecommunication Company (du), suggest that the UAE had almost 10.17mn mobile subscribers at the end of June. However, the mobile customer base grew by 3.8% in the first half of the year, one of the weakest performances to date. For two consecutive quarters now, mobile market leader Etisalat has reported a loss of mobile customers. The report suspects that these losses relate to the deduction of inactive prepaid customers from the operator’s reported total.

Although we previously thought that Etisalat harboured a large number of inactive prepaid customers on its network, the latest regulatory data suggests that the level of inactivity in the UAE’s mobile sector is actually lower. The regulator has suggested that just 5% of the total mobile customer base, as reported by Etisalat and du, were inactive at the end of June, according to a 90-day active rule. The regulator’s data shows that there were 9.68mn ‘active’ mobile customers in the UAE at the end of June. Even once inactive customers are discounted, it is remarkable that the UAE’s mobile penetration rate is over 200%.

This points to the existence of a high number of multiple mobile phone owners, as well as a large number of migrant workers who use their mobile phones on an occasional basis.

This quarter sees some significant modifications to our mobile subscriber growth forecast for the UAE.

We now predict growth of just 5.3% in 2009. The weak growth reflects a market that is already nearing saturation point. It also reflects the departure of large numbers of migrant workers in the wake of the country’s economic slowdown. Nevertheless, we continue to anticipate growth in each subsequent forecast year. From 2010, it is predicted that the UAE will start growing again on the back of economic recovery. This development is expected to result in renewed demand for mobile services from a ‘second wave’ of migrant workers. The demographic characteristics of the UAE, together with the high proportion of prepaid users, means that the level of multiple SIM ownership is likely to continue being high.

In addition to revising our mobile forecast, this quarter sees the introduction of a new set of forecast figures for the number of fixed-line connections, internet users and broadband subscribers. Although the latest market data points to slowing fixed-line and internet user growth, broadband subscriber growth has been more impressive than expected.

The UAE remains in eighth position in our latest set of Business Environment Rankings for the telecoms sector of the Middle East. This is in spite of receiving a weaker score in the Telecoms Market and Country Structure categories. The Telecoms Market lower score reflects signs that mobile market saturation has been reached, with mobile market leader Etisalat reporting a loss of customers for two consecutive quarters. Meanwhile, the lower Country Structure score reflects the impact of a shrinking migrant worker population.