Du CEO says telcos will have to structure 5G pricing for return on investments
Telecom operators in the UAE and beyond will need to find new pricing models for highspeed 5G services, as mobile companies have struggled to price data effectively, said du chief executive Osman Sultan.
In December, the UAE’s Telecommunications Regulatory Authority gave the go-ahead to du and Etisalat to begin deploying 5G networks, which may offer download speeds of up to 20 gigabits per second; up to 50 times quicker than the existing 4G networks. The faster downlink and uploads offered by the technology are viewed as key to the development of smart cities and the Internet of Things, enabling the rapid sharing of data between networked devices and sensors for remote monitoring purposes.
Operators, however, will need to re-examine how to price such services in order to improve their return on investment from necessary extensive upgrades, Mr Sultan said yesterday.
“There will be an economic viability to 5G, provided we do our homework and we start pricing things properly,” he said. Network operators internationally had failed to effectively price 4G services, he said.
“As an industry [not just du] we priced 4G as a continuation of the way we … priced 3G and that was a mistake,” he said. “We should have from the beginning thought of pricing models totally differently.”
Operators throughout the Middle East have struggled to effectively monetise their investments in 4G networks.
“There is fairly vigorous competition in the mobile broadband markets in Saudi Arabia and Kuwait, and there are regular complaints from the operators that this is forcing them to price data “too cheaply”, given the investment they have to make to build and maintain networks,” said Matthew Reed, telecoms practice leader, Middle East and Africa at intelligence provider Ovum.
Du previously announced it plans to begin its 5G roll-out in the UAE from next year.
“We’re not waiting a couple of years, we’re starting to think [now] about what kind of 5G ecosystem we will have and what kind of economic models [to use],” Mr Sultan said.
5G services are being trialled by South Korean operator KT at this month’s Winter Olympics in Pyeongchang, enabling a range of services including the live video streaming from cameras attached to bobsleds and 360-degree video of figure-skating events.
US operators Verizon and AT&T plan to commercially launch 5G services this year, primarily using the technology for home broadband rather than mobile services.
Fourth-quarter profit at Emirates Integrated Telecommunications Company, the holding company behind the Dubai telco du, surged 15 per cent, the company announced yesterday, as operational efficiencies offset flat revenues.
EITC’s net profit before royalty rose to Dh425m for the three months to end December, compared with Dh370m for the same period a year ago.
Revenues meanwhile, increased by just 0.5 per cent to Dh3.5 billion for the quarter, thanks to a 1.5 per cent increase in mobile revenues to Dh2.6bn.
The headline figure came in ahead of an average analyst forecast of Dh3.4bn, compiled by Bloomberg.
EITC launched an efficiency programme in late 2016 to rationalise its cost of sales and operating and capital expenses to compensate for a slowdown in revenue growth.
The company’s profit for the year fell 2.3 per cent to Dh1.7bn after royalty, impacted by a 19 per cent fall in first quarter profit.
The operator’s capex spend is likely to reach Dh1.3 to 1.5bn for 2018, Mr Sultan said.
Abu Dhabi-based telco Etisalat on Wednesday reported a profit attributable to shareholders of Dh8.4bn for 2017, a 0.3 per cent increase on the previous year.
Etisalat’s fourth quarter profit fell 12 per cent to Dh1.97bn, according to calculations made by Reuters, in the absence of a quarterly breakdown.