AMMAN // Telecommunications operators will have to find innovative ways to charge their customers for mobile data services as demand is set to soar, the chairman of Etisalat says. Mohammed Omran said that as faster mobile standards are rolled out, operators will have to change the way they put a price on the capacity-intensive data services such as the internet and video on demand.
"Voice revenue is going down, but not in data," he said. "It's easy to charge on voice but it's difficult to charge data correctly. "Is charging unlimited the right way or is there a better way?" Mr Omran pointed to an Etisalat promotionin which mobile data was offered on an unlimited basis but with a so-called "fair use" policy. "If you exceed your limit, we do not charge you more but reduce your speed," he said. "Maybe this is a good model because there is a need to spend more on networks, but there is a need to rationalise it."
The dilemma is not limited to the Arab world. The big US operator AT&T recently dropped its offer of unlimited mobile data after it saw the strain the promotion was putting on its networks. Meanwhile, Mr Omran said Etisalat was still interested in pursuing opportunities across the Middle East. It is in talks to purchase a stake in one of India's mobile companies. India's telecoms sector is the second-fastest growing in the world behind China's, with a record 20.3 million users added in March, figures from the Cellular Operators Association of India show.
In December 2008, Etisalat entered India after acquiring a 45 per stake in the former Swan Telecom from Dynamix Balwas for $900m and has recently introduced its mobile services in 15 regions with its Indian subsidiary, Etisalat DB. The subsidiary was one of a handful of bidders that failed to win any new licences for the 3G spectrum in a wireless auction last month. "India is an important market. It's one of the largest markets in the world," said Mr Omran. "We think that we will continue to be active in India."
After the 3G auction, there has been speculation that Reliance Communications, India's second-largest telecoms operator, would sell a 26 per cent stake to either Etisalat or AT&T. But Mr Omran dismissed the rumours. "We have not made an offer to Reliance or anyone else," he said on the sidelines of a telecoms industry conference yesterday. "We are looking at Reliance and other opportunities in India."
There are a variety of ways Etisalat could expand in India, he said but declined to elaborate. "It is quite complex, but there is a right way," Mr Omran said. "There are several things we could do, like selling the existing operations and buying another." But even if Etisalat announces a deal with another operator, it will have to wait for the Indian government's restrictions on telecoms mergers to be amended.
Indian law states no operator can control more than 10 per cent of another operator in the same licence area. Legislation also restricts Etisalat, a foreign operator, from purchasing another Indian telecoms company until January. "Certain guidelines for consolidation are being evaluated by the [Indian] government now, so that's why we're looking at the Indian market," Mr Omran said. Telecoms analysts said that as a new entrant, Etisalat had to make a big play in India or risk being shut out of the market.
"They've seen the writing in the wall, that it doesn't make sense to invest in a greenfield operator [such as Etisalat DB]," said Sanjay Chawla, an analyst with Anand Rathi Financial Services in Mumbai. "They won't make money. Buying other operators at a reasonable valuation ? is a better thing to do, but they have to figure what they've invested their $900m in." Mr Omran also said Etisalat was still interested in expanding in other markets such as Libya, Iraq and Syria. He played down earlier comments that the operator was keen on buying the mobile company Djezzy in Algeria.
"Our business depends on doing things without much noise until they are ready," Mr Omran said. "I don't want to make noise for no reason."
dgeorgecosh@thenational.ae