UAE opens its telecommunications sector

UNCLAS ABU DHABI 001155 SIPDIS SENSITIVE DEPT FOR NEA, NEA/ARP, EB DEPT PASS TO USTR - JASON BUNTIN E.O. 12958: N/A TAGS: ETRD WTO USTR TC SUBJECT: UAE opens its telecommunications sector ¶1. (U) On April 12, UAE President Zayed bin Sultan Al- Nahayan issued Federal Decree 3 of 2004 "organizing the telecommunications sector." According to the UAE's official news media, the decree revokes Emirates Telecommunications Corporation's (Etisalat) monopoly rights and authorizes new companies to apply for licenses. In a second decree, President Zayed established a "Higher Supervisory Committee" to oversee the telecommunications sector and stipulated that this committee would have the authority to grant licenses to new firms. President Zayed also appointed Minister of State for Finance and Industry Dr. Mohammed Khalfan bin Khirbash to chair the committee and appointed a representative from the President's court and the Vice President's court to the committee. (Note: the Vice President is the ruler of Dubai.) Officials at the Ministry of Finance and Industry confirmed the news, but were unable to give any more details. ¶2. (U) The decision also set up an authority to issue implementing regulations and to monitor services. We don't have any further details yet on how new licenses will be issued, although press reports say that they will be issued in accordance with the UAE companies' law. ¶3. (SBU) Comment: This welcome decision caught a number of people off guard, and appears to have been made at very senior levels of the government. The breakdown of the committee is interesting. Dr. Khirbash is a forward leaning technocrat. Ahmed Mohammed Al-Hamiri represents the President's Office and Ahmed Abdullah bin Bayat represents the ruler of Dubai (the second most influential emirate and the one emirate other than Abu Dhabi with a veto over federal legislation). Etisalat is a successful company and a revenue earner for the federal government. It is 60% government owned and, as a monopoly, is required to remit half of its profits to the federal government. The actual impact of this decision on the telecommunications sector in the UAE will depend on how the decree is implemented. Nevertheless, this is potentially a significant step forward for the UAE and we believe it reflects the input of Dr. Khirbash, who is a major advocate of reform. We hope that more details will be made available by the April 26-27 TIFA Council Meeting. WAHBA