US embassy cable - 05ABUDHABI2067

C O N F I D E N T I A L ABU DHABI 002067 
 
SIPDIS 
 
STATE PASS USTR FOR DBELL 
 
E.O. 12958: DECL: 05/09/2015 
TAGS: ECPS, EINT, ETRD, EFIN, PGOV, KPRV, TC 
SUBJECT: UAE OPENS TELECOM SECTOR FOR COMPETITION 
 
REF: DUBAI 1520 
 
Classified By: (U) Ambassador Michele J. Sison for reasons 1.4 (b) and 
(d). 
 
1. (U) The UAE Telecommunications Regulatory Authority (TRA) 
announced this week it has approved the establishment of a 
new telecommunications company that will compete with 
Etisalat, which up until now was the sole telecommunications 
entity in the UAE.  According to a May 7 Gulf News report, 
TRA granted a $1.1 billion license to an unspecified telecom 
provider.  Hasan Al Kilany, senior legal counselor for TRA, 
told Econoff on May 10 that 40 percent of the company will be 
government owned, through the General Pensions and Social 
Security Authority.  He said that the remaining 60 percent 
will be divided between public shareholders and private 
entities, and the company may hold a public offering on the 
UAE stock market for some of the shares. 
 
2. (U) Dr. Mohamed Khalfan Bin Khirbash, Minister of State 
for Financial and Industrial Affairs, was quoted in the Gulf 
News article as saying that, "The UAE Government's objective 
in forming this company is to offer another option for telcom 
users and customers, as the company is licensed to provide 
all telecom services...The initiative constitutes the first 
step in the liberalization of the sector."  Officials within 
the UAEG had previously indicated their intention to 
deregulate the telecommunications sector, making this 
announcement a widely anticipated move. 
 
3. (SBU) As reported reftel, Dubai IT managers and Dubai 
government officials had told us they expected that the 
second UAE-wide licensed telecommunications company would be 
TECOM.  TECOM, the parent company of Dubai Internet City and 
Media City, has its own telecom operations inside of Dubai's 
free zones, which are exempt from the Etisalat monopoly. 
Talking to PolEconoff on May 9, Farid Faraidooni, Deputy 
General Manager of TECOM, said that the TRA press release had 
taken him by surprise.  According to Faraidooni, the new 
telecommunications company referred to by TRA was not TECOM, 
but apparently a new company to be based in Abu Dhabi. 
Faraidooni was unsure about this new company, but felt that 
TRA would be coming out with some "clarifications" over the 
next week or two. 
 
4. (C) Dubai Silicon Oasis director Dr. Eesa Al-Bastaki, 
asked whether he thought TECOM would be the second company, 
told CG Dubai May 8 that he doubted it very seriously, as 
TECOM was "not yet ready to play a national role."  When the 
CG pointed out that TECOM would almost certainly be more 
ready than a hypothetical, unspecified company that had not 
even been formed yet, Al-Bastaki agreed, but intimated wryly 
that perhaps that was the point (i.e. that announcing, and 
then later forming, a brand new company could be seen as a 
way of postponing real competition in the telecom sector.) 
 
SISON