Market Insight

Emirati telco Du launches UAE’s new mobile brand as rival Etisalat unveils plans to follow suit

September 13, 2017

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Emirates Integrated Telecommunications Company (EITC) trading as Du, launched their second mobile brand ‘Virgin Mobile UAE’ on September 5 2017 with rival operator, Etisalat, also launching of their second mobile brand, Swyp, just two days later (September 7 2017).

Both operators are seeking to diversify their offerings aimed at the underserved millennial market by offering data-centric packages through their secondary brands, providing benefits like zero-rated data for social media, interchangeable SMS and voice minutes, discounts at restaurants and access to nationwide WiFi hotspots across each of the Emirates.

  • The UAE’s mobile market currently serves over 19 million subscribers over just two networks, with Etisalat retaining 54.6% market share and Du with 45.4% as of Q1 2017.
     
  • In February 2017, EITC and Virgin Mobile Middle East and Africa entered a multi-year licencing deal signed for exclusive rights to the use of the Virgin Mobile brand in The United Arab Emirates (UAE).
     
  • Virgin Mobile, a prominent Mobile Virtual Network Operator (MVNO) in the region, has successfully used the MVNO business model to enter several saturated mobile markets targeting underserved youth segments internationally, an experience EITC will be able to capitalise on through Virgin Mobile’s advisory position in their agreement.

 

Our Analysis

The Emirati mobile market currently operates as a duopoly split between Etisalat and Du with Etisalat, the incumbent, consistently maintaining a larger market share.

ETIC reported profit losses in the last financial year citing rising royalty payments to the federal government as a contributing factor, with mobile revenue growth experiencing a decline due to market saturation. However, unlike Etisalat, ETIC operates only in the UAE and had struggled to increase or diversify their revenue streams since they began operations in 2005. EITC’s fall in profits led to an operational restructuring and redundancy plan to reduce their workforce that began in 2013 with an aim to reduce operational expenditure, a plan that continued through to this year,

EITC’s decision to adopt a sub-brand strategy was underpinned by the need to increase consumer offerings in the saturated UAE market, a dilemma that both Du and Etisalat experienced.

Mobile operator sub-bands protect brand equity whilst allowing MNOs to provide a distinct brand on their existing network without further infrastructure investment or losses, whilst minimising the need for a new operator or MVNO. Sub-brands enable operators to increase revenue whilst appealing to niche markets, without eroding ARPU or losing subscribers to other additional operators or MVNOs.

EITC’s deal with Virgin Middle East and Africa (Headquartered in Dubai’s Internet City) will see Virgin Mobile UAE operate as a business unit within EITC, with former CEO of Virgin Mobile Saudi Arabia (Karim Benkirane) running the small in-house team. Virgin Middle East and Africa will assume an advisory positon for Virgin Mobile UAE, in the company’s first brand licensing agreement in the region.

Both Virgin Mobile UAE and Swyp will offer services through their respective mobile apps, where users can build their plans and request SIM cards for the selected services. Both apps will double up as mobile plan-management tools for users to manage their subscriptions, check their allowances and change between preferred tariffs – a tool that will allow the new brands to benefit from lower operational costs as all payments and changes can be made within the app.

Virgin Mobile UAE went live on September 5 2017 offering custom-made packages, with a promotion that allows users to trial the service for free in their first month with 1-hour delivery for all new SIM cards anywhere in the UAE.

Virgin Mobile UAE plans start from as little as 79 AED (approx. US$ 22) which can include 1GB (+1GB free) data and 50 minutes/SMS, and go up to 279 AED (approx. US$ 76) for a plan offering 300 minutes/SMS and 7GB (+7GB free) data allowance.

Etisalat’s Swyp, launched on September 7 2017, offer an exclusive membership style package, at a monthly base fee of 50 AED (approx. US$14) which gives a Swyp member 5GB data allowance for social media apps, free nationwide WiFi available in some areas of the Emirates and access to discounts at a range of retails and restaurants. Swyp subscribers can also pay for add-ons for voice minutes, text messages, extra data or social media-focused data packages ranging from between 25 AED - 150 AED (US$ 7 - US$ 40).

Swyp subscribers can have their SIM card delivered or schedule pick up from 10 selected Etisalat stores once they have ordered the service via the Swyp app.

In comparison to Virgin Mobile, Swyp lacks some flexibility that undermines the data usage demands of millennials that go beyond social media. Swyp members will currently pay at least 50 AED for 1 GB of data that is not restricted that can allow for streaming on the go or web browsing bringing their monthly total to 100 AED approximately 21% more expensive than Virgin Mobile’s base offering. 

However, Virgin Mobile UAE and Swyp are significantly cheaper for data (per 1 GB) than their sister brands, which both offer mobile data of 1GB at 100AED (US$ 27). Both brands will undoubtedly change the mobile market in the UAE, with potential for more sub-brands launching in the future or more flexible packages that appeal to the youth segment’s needs.

Organization
Du Etisalat
Research by Market
Mobile & Telecom
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