Du, the UAE-based telecoms operator, reported a six per cent year-on-year increase in its pay TV customer base to 124,000 subscribers in Q1 2013, up from 118,000 at the end of Q1 2012. Du gained only 2,000 subscribers on the previous quarter. The growth of its mobile customers was much more impressive, reaching 20 per cent over the same period of last year. Du reported 6.64m users.
IPTV operators are faced with a promising future, in terms of subscribers and revenue growth, in the MENA region. Currently, IPTV is the only pay TV platform after satellite, with only 16 per cent of total pay TV subscribers compared to satellite's 84 per cent. But these figures do not pay justice to IPTV, which as a platform has rolled out in only six countries. In fact, in countries like the UAE, IPTV is the preferred method of accessing encrypted content, with penetration of almost 50 per cent, while pay satellite attracts only 30 per cent. IPTV rollout has been helped by an increasing investment in telecommunications infrastructure, which in turn leads to increased competition for the provision of broadband services. Other factors that have contributed to IPTV growth are the housing regulations in the UAE, Qatar and Bahrain forbidding the installation of satellite dishes (up to a certain number for instance no more than four in the UAE) in buildings, the weather conditions which do not favour satellite reception (excessive heat, sandstorms) plus the peace-of-mind attractiveness of a triple-play offer. Furthermore, all IPTV operators in the Gulf States have inked deals with the major satellite pay TV operators (Al Jazeera, OSN, Abu Dhabi Media Company, Al Majd) effectively re-selling the satellite packages to their customers.
Du, the IPTV service of the Emirates Integrated Telecommunications Company, is the second, in terms of subscribers and revenues (bar 2012 when it had the higher revenues) trailing Etisalat's IPTV service, e-Life. At the end of 2012 e-Life had almost five times more subscribers than du (510,000 vs 122,000) benefiting from the fact of its longer presence in the market (eight years ahead of Du, albeit as a cable operator first), its larger network and the fact that it covers the most densely populated areas in the Emirates. Du, on the other hand, has also experienced healthy subscriber growth from 58,000 at the end of 2008 to 122,000 four years later (2012). These figures indicate a compound annual growth rate (CAGR) of 19.8 per cent, which is impressive even by MENA standards. In fact Du's CAGR is higher than that of all satellite pay TV operators over this period, bar Al Jazeera (which experienced a 38.7 per cent CAGR). This is mainly due to Al Jazeera's inheriting more than 350,000 subscribers from the acquisition of ART sports channels.
In addition, it shows that the drop in subscriber numbers in Q3 2012 was a temporary hiccup. Subscriber growth was accompanied by impressive revenue growth as Du's income from its IPTV business practically doubled between 2011 and 2012 (from 94m UAE dirhams to 179m). The main reason behind this growth is the rising of the price of the basic triple-play package more than 180 per cent (from $30 to $85). While this rate of growth is not sustainable in the future, IHS MENA IS forecasts that Du's revenues in 2017 will reach 236m UAE dirhams (32 per cent growth). The operator wants to support these growth levels by expanding into more value-added services (like a quad-play offer) by investing in the deployment of the most modern IP-routing technology which will allow Du to simplify network operations and to manage multiple networks from a single IP platform. On a parallel move to boost its HD content offering, Du has partnered with Alcatel-Lucent for the construction of a 100G fibre optic technology communications network which will support up to 8.8 Terabit-per-second broadband capacity. With this latter move, Du wants to accommodate future needs, to differentiate from competition and to deploy the infrastructure that will allow it to meet the ever-growing demand for high-speed broadband data from its clientele.