etisilat and du eco project

A COMPARATIVE ANALYSIS ON THE U.A.E TELECOM SECTOR .

COMPILED BY :SIDDHARTH C SHAH .MOHMMED MASOOD .

Introduction

• About ETISALAT:– Vision & Mission, SBU’s, Marketing mix– Market segmentation strategies

• About Du:– Vision & Mission, Marketing mix– Market segmentation strategies, Pricing Strategies

Conclusion

AN INTRODUCTION ABOUT THE UAE TELECOM SECTOR

• Only two cellular companies are in UAE.• Etisalat is Pioneer and leading company in this

region.• There was a only one cellular operator in the whole

country , which termed the UAE telecom market as a MONOPOLY MARKET .

• DU few years back launched, and customer attracted due to low price offer.

• Emirates Telecommunications Corporation, branded trade name Etisalat is a UAE-based telecommunications services provider.

• Etisalat as a joint-stock company between International Aeradio Limited, a British Company, and local partners.

• Majority of customer is of Etisalat.Etisilat controlled the market till the year 2006 .

• As of November 2009, Etisalat is the 13th largest mobile network operator in the world, with a total customer base of 100 million.

• company has introduced new services, including 3G

and MMS in 2003 and BlackBerry services in 2006.

• Thirty years of monopoly of Etisalat ended with Telecommunications Regulatory Authority (TRA) granting a license to a second telecom operator “du” in 2006.

• providing customers the best in choice, quality, innovation and pricing

• The firm gained 182,100 subscribers by in the second quarter of this year, bringing its total active mobile subscribers to almost four million

• Offering the best in class telecommunication service

Monopoly

• In economics, a monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it.

• A monopoly is a market structure in which a single supplier produces and sells the product. If there is a single seller in a certain industry and there are no close substitutes for the goods being produced, then the market structure is that of a "pure monopoly"

Characteristics of Monopoly

Capital requirements

Economic barriers

Economies of scale

Network Externalities

No substitute goods

Legal barriers

MARKETING MIX

PRODUC

T

•Etisalat (Wasel) – Prepaid service

•Etisalat (GSM) – Post paid service

PRICE

•Pricing of Etisalat is higher compare to du.

PLACE

•Etisalat is fully penetrated in this region and it is available at all malls within UAE, groceries, mobile service shops and all air ports

PROMOTI

ON

•Etisalat spends a considerable amount on its promotion and have coverage through the media, news papers, radio (FM), Television, bill boards

MARKET SEGMENTATION STRATEGIES

Casual Callers

•offered wasel prepaid connection, with straight calling charges

Business calle

rs

•offered post paid offer to facilitate the business customers

Local

callers

•offered post paid connection which provides the discount to the caller depends on its use

Expatriates

•designed favorite country plan to capture major market share

Late night internation

al caller

s

•offered off peak hours to utilize the network

Mid night international

callers

•super off peak hour, to encourage the user to call late night

PRICING STRATEGIESPricing objectives

High price with good quality.

Several discount offers.

Product mix pricing strategies

•offers bundle pricing •e.g. :wasel prepaid package

Price adjustment strategies

design different plan to suit the customer need using discount, allowance •Reducing postpaid charges from 120 to 100 AED

Financials for the company Year Net profit Revenue

2004 3418 104342005 4256 128662006 5860 162902007 7297 213402008 8511 293602009 8836 30831Growth rate* 20.1% 23.32%

du

What happen when DU entered?• Based on the survey of TRA in 2009, 99% of the

households in the UAE have at least one mobile phone in the household. The average UAE household has 4.3 mobiles.

• The market share with in UAE had declined but Etisalat managed to by entering in to different market.

• For a consumer the choice of service provider is generally being determined by geographic location. If the location is covered by du then a consumer will not get Etisalat connection.

• Typically du has a monopoly with most of the free zones, while Etisalat has a monopoly in other than free zones.

• Prices for broadband internet services in the UAE have fallen by 31 percent since operator du joined Etisalat in the telecom market, a new report has said.

DUOPOLY• A true duopoly (to sell)) is a specific type of

oligopoly where only two producers exist in one market. In reality, this definition is generally used where only two firms have dominant control over a market. In the field of industrial organization, it is the most commonly studied form of oligopoly due to its simplicity.

Types of duopoly

• There are two principal duopoly models, Cournot duopoly and Bertrand duopoly:

• The Cournot model, which shows that two firms assume each others output and treat this as a fixed amount, and produce in their own firm according to this.

• The Bertrand model, in which, in a game of two firms, each one of them will assume that the other will not change prices in response to its price cuts. When both firms use this logic, they will reach a Nash Equilibrium.

MARKETING MIXFOR DU .

PRODUCT

•E-lit plan - prepaid plan

•Pay as you go- prepaid plan

•Visitor mobile line- prepaid plan for visitors

PRICE

•Du has planned several different plans for the convenience of user

PLACE

•available everywhere in UAE, from mega mall to shopping centers, super market, tuck shop, bank sites, petrol pump.

PROMOTI

ON

•promoted its product, on every occasion, organized programs and promoted the product features.

Market Segmentation Strategies

Casua

l callers

•Offers “pay as you go plan”

Expatriates and International

callers

•Primarily offers “more international” call plan and does not support local calls

Busines

s caallers

•offers Elite plan where caller gets more discount when calls more

Office break

callers

•offers off peak timing calls, during the office beak from 2:00PM to 4:00PM at low rates for both international and local numbers

Visitor

s

•introduced a visitor plan as normally maximum limit of visit visa

Late nigh

t international callers

•late night off peak hours timing which starts from 9:00PM to 7:00AM

PRICING STRATEGIES.

Pricing objectives •maximum market share by provide customer

economical services by targeting the appropriate segment

Price adjustment strategies•psychological pricing, which du

launched its products in market is the per second billing

Product mix pricing strategies•using bundle pricing strategies •post paid package “Elite plan” in which the

customer as to pay additional amount at the time of new connection but this plan gives the bonus amount

DU reports* annualised

DateProfitAED

EPSAED

EPS*AED

PriceAED

PE* PBV ROE* ROS

DU 2008 FY

09 Feb 2009

4.1m 0.00 0.00 1.84 1,784.7 2.9 0.2% 0.1%

DU 2008 Q4

09 Feb 2009

78.2m 0.02 0.08 1.84 23.5 2.9 12.5% 6.4%

DU 2008 Q3

02 Nov 2008

31.5m 0.01 0.03 4.14 131.6 6.8 5.2% 3.0%

DU 2008 Q2

24 Jul 2008

-43.8m -0.01 -0.04 5.71   9.5 -7.3% -4.8%

DU 2008 Q1

05 May 2008

-61.7m -0.02 -0.06 6.17   10.1 -10.1% -8.2%

DU 2007 FY

14 Feb 2008

-0.89bn -0.22 -0.22 6.50   10.4 -35.3% -57.6%

DU 2007 Q4

14 Feb 2008

-147m -0.04 -0.15 6.50   10.4 -23.4% -22.9%

DU 2007 Q3

31 Oct 2007

-242m -0.06 -0.24 5.07   7.6 -36.5% -58.7%

DU 2007 Q2

31 Jul 2007

-281m -0.07 -0.28 4.99   6.9 -38.8% -92.9%

DU 2007 Q1

01 May 2007

-216m -0.05 -0.22 4.90   6.2 -27.2% -117.8%

DU 2006 FY

31 Jan 2007

-0.61bn -0.15 -0.15 6.16   7.3 -17.9%  

CONCLUSION

• Etisalat is three-fifths owned by the United Arab Emirates government. The firm's nine-month profit fell to 5.6 billion dirhams from 6.4 billion in the period to September 30 last year.