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Summary

Emirates Integrated Telecommunications (EITC), the parent company of UAE telecoms operator Du, has acquired a license from Virgin Group to operate Virgin Mobile-branded services in the country. Virgin Mobile will operate using Du's network and infrastructure in the same way that Du does but will be run by a separate business unit under EITC.

The particulars and potential of Virgin’s launch in the UAE

The launch of the Virgin Mobile brand in the UAE will expand its presence to two Middle Eastern markets – the other being Saudi Arabia, where Virgin launched as an MVNO in 2014 and now has 2 million subscriptions. The Virgin brand was also launched in Qatar in 2010, but was withdrawn after a little over a year, following objections by the regulator.

EITC's license term is for over five years, granting it full rights to ownership, management, and operation of the brand in the UAE. The launch of Virgin Mobile is also fully compliant with the current regulatory framework in the UAE.

Virgin Mobile will be managed by a unit housed within EITC, which will handle all market-facing activities including marketing, sales, customer care, and product development. Virgin Mobile will have a “digital business model” and will not target the mass market. In addition to the synergies the reseller would have with Du, we presume that they would be following French operator Free’s footsteps in having a higher degree of online presence and services in lieu of using legacy channels.

There is a gradual movement in the region toward the legalization and introduction of MVNOs. The GCC has proven its readiness, demonstrated by successes in Oman and recent launches in KSA. The UAE enjoys a high level of digital readiness and is a tech-savvy market with healthy purchasing power. Moreover, given the combination of high smart-device penetration rates, demand for digital services and connectivity, and the high price of data, Virgin would be able to enter with a competitive price and proposition targeting the digital-savvy segments of the population, namely youth, millennials, and young professionals.

With the aforementioned synergies in mind and without regulatory hurdles, Virgin would be able to bring the Virgin character into the market and establish its brand in the short term and bring innovation and competition on the digital front.

Appendix

Further reading

MVNO Case Studies: Virgin Mobile Saudi Arabia, TE0009-001554 (October 2016)

MVNO: A Market in Transition, TE0009-001525 (August 2016)

Author

Tareq Masarweh, Senior Consulting Analyst, Middle East and Africa

tareq.masarweh@ovum.com

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