Etisalat’s royalty fee may be cut

18 May 2007

Gulf News reports that UAE’s incumbent telco Etisalat may no longer be obliged to pay half its profits to the state following discussions in the higher echelons of government. The fees have traditionally been paid in exchange for the firm’s monopoly status. With the recent entry of second national operator du in the cellular market, the monopoly has been broken and the UAE Supreme Committee for the Supervision of the Telecommunications Sector has now taken up the issue, according to a government official. Mohammad Al Ganem, director general of the Telecommunications Regulatory Authority (TRA) said, ‘The royalty programme is being decided by the Supreme Committee. The issue is still pending.’

In 2006 Etislalat recorded net profits of AED5.86 billion (USD1.6 billion), meaning under the current system it would have paid nearly AED3 billion directly to the government. du is also required to pay royalties, therefore may also benefit from the committee’s decision. The market is speculating that fees may be cut by between 10% and 20%. du CEO Osman Sultan said yesterday he looks forward to any relief in its obligations. ‘We will welcome any decision the authorities make,’ he said.

United Arab Emirates, Du (Emirates Integrated Telecommunication Company, EITC), Etisalat UAE