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Strategic Management
Etisalat & IT Outsourcing Strategy
The Research has been done by
Yasser Al Mimar

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TABLE OF CONTENTS
Introduction ............................................................................................................................... 2
Literature Review ...................................................................................................................... 3
Overview of outsourcing ........................................................................................................ 3
Definition of outsourcing and IT Outsourcing ....................................................................... 3
Overview of IT Outsourcing ................................................................................................... 4
History and Evolution of IT Outsourcing ................................................................................ 4
Relevance of Outsourcing to today’s Business Challenges.................................................... 6
CASE STUDY ............................................................................................................................... 8
Etisalat Overview ....................................................................................................................... 9
Etisalat and UAE Telecoms Market ............................................................................................ 9
Competition forces change of strategy in Etisalat ..................................................................... 9
Etisalat & IT Outsourcing Strategy ........................................................................................... 10
Exhibit1 .................................................................................................................................... 15
References ............................................................................................................................... 16
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Introduction
As industries becomecompetitive, firms and organizations have been using their core
competencies to gain competitive advantage. Outsourcing has become one of the strategies
adopted by businesses to manage their Information systems (Gonzalez, Gasco&Llopis, 2006). In
the same time using blue ocean strategy to create uncontested market space and make the
competition irrelevant is considered a magic framework for company's growth and success
To begin with, changing business climate found many firms looking for alternative ways to
provide improved quality in their products, improved service to their customers, reduce time
and cost to achieve company’s goals and get profit and reputation. Furthermore, the global
trade has opened the competition doors for companies, and placed these companies under
unprecedented competitive pressure. Businesses thus must understand how to maintain their
competitive advantage, remain competitive in a volatile consumer market and overcome the
critical problem of global competition. Outsourcing IT functions was one of the tools that used
forsurviving in the market competition,and has become a popular source of competitive
advantage.
As a result of both strategies, a major trend in evidence is the outsourcing of various
organizational functions, and accelerated technological advances have substantially improved
industrial productivity. So in the domain of information systems and technology, outsourcing
has become a viable strategic alternative to acquire and managing costly as well as complex
information technology (hereafter called IT) (Grover, Cheon&Teng, 1994). And in the domain of
products and services, Blue Ocean has become a starting point for a company to win in the
future. (W. Chan Kim & Renée Mauborgne 2005) and works parallel with the outsourcing
strategy
The researchers have agreed that Information technology adoption offers a means of saving
costs and increasing administrative efficiency. Krass (1990) indicated that outsourcing IT
services can save 10-50% in IT expenditure. Based on that many companies nowadays have
started to cut staffs, costs, and increasing efficiency by paying other companies and transferring
some of an organization's recurring internal activities to outside providers (Maurice F , 1999) in
order to run IT and other support divisionsto remain competitive such as, telecommunications
companies.
Those companies now are realizing the importance of developing their outsourcing capabilities
and enter into arrangements with vendors to handle support processes (e.g., logistics,
distribution, warehousing and information technology).
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ETISALT - Emirates Telecommunications Corporation as example of these companies which
isbased in UAE as telecommunications services provider, operating in 18 countries across Asia,
the Middle East and Africa. Outsourcing tool is one strategy that Etisalat is adopting to reduce
costs and maintain customer service quality.
In truth, firms have outsourced since the industrial revolution, and Information
Systems/Information Technology (IT/IS) outsourcing has become a basic strategy and has
experienced considerable growth all over the world over the last several decades (King, 2008;
Beasley et al., 2009) and this growth is expected to be continued and maintained in the near
future (Gonzalez et al. 2006c; Beasley et al., 2009) – WHY? Because is considered an effective
way to create competitive advantages by lowering costs, increasing productivity, and allowing
the organization to focus on its core activities (Davis et al. 2006; King 2007; Can et al., 2009).
Literature Review
Overview of outsourcing
According to Ciborra (1993), companies are following different supply chain
management strategies to fulfill the customer requirements and improve company's
profits due to increasing competition and up down business environment. Therefore, a
competitive enterprise must satisfy their customers need by improving service speed,
flexibility and response capability within the changing environment (Wee, et al, 2010).
Adopting one of the value disciplines of competitive advantagewhich is outsourcing will
make the organization differentiation from competitors;in 1776 Adam Smith formulated
a theory of competitive advantage, describing the notion of outsourcing as a way of
reducing costs by hiring cheaper labor in less developed countries. In the contrast,
&according to Wee, et al (2010), outsourcing reduces capital, labour and liability
exposure.So as a common factor,we deduce that successful implementation of an
outsourcing strategy has been credited with helping to cut cost (Gupta and Zeheuder
1994; Greer, Youngblood and Gray 1999).
Definition of outsourcing and IT Outsourcing
Outsourcing isa concept of moving production and information systems out of the firm
by contracting with competent providers, it is sourcing of a service (or product) from
outside the host organization. One of the main outsourcing tools and considered as
traditional outsourced services of expertise throughout the 20th centuryis Information
technology (IT) outsourcing.
IT outsourcing is a process by which transfer of property or decision rights in varying
degrees over the IT infrastructure takes place from the user organization to an external
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organization (Barthelemy& Geyer, 2004). A few other studies have defined outsourcing
as an act of subcontracting a part or all of a firm’s IT function to one or more external
vendors (Loh&Venkatraman, 1992; Sengupta&Zviran, 1997).
For the purpose of this research I would add the definition used by Smith (2005):
outsourcing is transferring a good or service by either contracting out or selling an
organization’s IT assets to a third party supplier. The supplier may be a systems
consulting firm, contractor, or hardware & software vendor.
Overview of IT Outsourcing
Information Technology is considered as non-core functions of outsourcing, the idea of
outsourcing is also applied for the procurement of IT services. Studies have shown that
organizations have been outsourcing IT functions since the early 1960s (Due, 1992;
Lacity, 1992). From data processing in the 60s, modern day IT outsourcing has made
significant strides with a variety of business processes being outsourced. The use of
outsourcing is becoming more sophisticated and nowadays more organizations are
outsourcing business processes. As companies grow in size and operations, they
outsource some of their business processes to focus on their core competences to
remain competitive. Therefore, it becomes increasingly clear that their focus has to be
redirected to their core activities while the non-core functions can be 'clouding' or
'outsourced' to suppliers or third party specialized in that particular function.
Information Technology – Information System IT/ISone of such areas commonly
outsourced in most of organizations.
Grover and Teng (1993) examined the positive influence of IT/IS outsourcing on an
organization's core, competitiveness, capability, employees, economics, cost and
technology to evaluate the potential advantages gained by organizations.
History and Evolution of IT Outsourcing
Outsourcing is a phenomenon that as a practice originated in the 1950s, but it was not
until the 1980s when the strategy became widely adopted in organizations (Hatonen&
Eriksson, 2008).For IT outsourcing aspect as said earlier, organizations or companies
have been using IT outsourcing since the early 1960s (Due, 1992; Lacity, 1992). In 1963,
Perot’s electronic data systems (EDS) were performing data processing services for
Frito-Lay and Blue Cross (Mason, 1990). In the early 1970s software programming was
first moved offshore as software production was easily moveable, since it seldom
needed to be committed to a physical medium (Dossani& Kenney, 2004).
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Furthermore, Kodak’s initial decision to outsource the bulk of their IT functions in
October 1989, by giving the bulk of data center operations to IBM that was originally
scheduled to run for a 10-year span (Lacity&Willcocks, 2000; Dibbern, et al., 2004;
Patton, 2005). System integration was another popular outsourcing segment in the
1990s and involved highly complex technology, including network management and
telecommunication, so IT outsourcing has long played an important role in the
outsourcing framework. Broadly speaking, the interest in IT outsourcing resurfaced in
the early 1990s, not for contract programming or data processing services, but for
network and telecommunication management, distributed systems integration,
application development, and system operations
From above series IT Outsourcing history, we deducethat outsourcing is a wellestablished practice, and outsourcing is not just an option it is now a pivotal part of any
successful company.In the same time, we should know that outsourcing is not simply
limited to private vendors.Services can be outsourced to other public entities as well. So
outsourcing is no longer restricted to small and medium-sized firms that do not possess
their own IT infrastructure, but large corporations also resort to outsourcing (Mahmood,
Hall &Swanberg, 2001).
Outsourcing was not formally identified as a business strategy until 1989 (Mullin, 1996).
In the 1990s, as organizations started to focus more on cost-saving measures due to
global economy slowed, these organizations started to outsource most of those
functions necessary to run a company, and they realized that outsourcing has become
more results- and value-driven, and less about simple cost-cutting, this in turn, has led
to demand for outsourcing functions and continues evolving and mature in outsourcing
market.
Each action should face reaction, economic downturns made a spark for seeking plans
to reduce IT costs and also shake up traditional IT outsourcing delivery models. The
period between 2001 and 2003, for example, increased the adoption of offshoring, that
is, the export of IT work to places such as India or china, where labor is significantly
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cheaper than in developed markets, such as the United States and Europe. (Adam
Smith, 1776 )
IT can be thought of as a transport system, carrying and transferring digital data just as
the electricity grid carries energy.So the emphasis has moved from contracting out IT
hardware and IT services towards studied based forms of outsourcing, to cover missing
internal capabilities and skills, to realize possible benefits of new IT, and to gain access
to knowledge and innovation of “best of breed” suppliers (DiRomualdo and Gurbaxani
1998, pp. 68-71; Quinn 1999, p. 9; Quinn.2000, pp. 13-14).
In traditional outsourcing, a supplier owns and operates the infrastructure, applications,
and people required to deliver services to a customer organization. Changing structure
of IT outsourcing market and the continuously developing business models have had a
major impact on the type of outsourcing relationships. Focusing and mechanism has
shifted towards closer interaction between outsourcer and provider as organizations
engage in network partnerships with multiple suppliers, each of which is best-in-level
for the respective outsourced function and where one vendor often takes on the role as
the coordinating prime contractor (DiRomualdo and Gurbaxani 1998, pp. 70, 71;
Kakabadse and Kakabadse 2000, p. 677; Lacity and Willcocks 2001, p. 3).These new
types of partnerships are considered an investment which connecting two
partiesoutsourcer and provider together in tie relation and determine a fit which makes
it more beneficial to stay with the partner than to continuously having to establish new
connections (Mohr and Spekman 1994, p. 135).So these real partnerships are not just a
mixture between those two extremes, but are characterized by closer, more intimate
bonds (Mohr and Spekman 1994, p. 140).
Relevance of Outsourcing to today’s Business Challenges
According to the authors and researchers, IT outsourcing cut costs by as much as 10 per
cent to 50 per cent (Lacity&Hirschheim, 1993). In the contrast, cost reduction is not the
only key reason behind all IT outsourcing decisions. The driving forces for IT outsourcing
is the need to focus on core activities and technical consideration, in addition to cost
reduction (Costa, 2001).
Therefore, organizations or companies concentrate on their core activities and exploit
competencies based on their experience and knowledge, contracting out activities in
which they are less competent (Beaumont & Costa, 2002).So all these factors such as,
lower costs, improved productivity, best service, higher quality, higher customer
satisfaction and ability to focus on core areas are some of the benefits of outsourcing. In
the other hand, it is important to not only focus on achieving these objectives, but also
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evaluate the possibilities of running a successful business while outsourcing such as,
Cloud Computing as outsourcing tool to reducing the carbon footprint from company
domestic corporate. However, outsourced environments are complex and highly
integrated with organizations and operations. As complexity increasesmanaging
relationships with service providers becomechallengingand risks which are associated
with outsourcing or even IT outsourcing. For instance whenever, there is an outsourcing
decision, there is an inherent risk connected with it. In addition, in any outsourcing
contract, there are some hidden costs, unexpected outcomes, and decline in service
levels, to name a few (King &Malhotra, 2000).
IT Outsourcing as tool also has a challenge and has its downside. When functions are
shipped elsewhere, the organizations will face risks from several areas. I would list some
of these challenges that could affect negatively on organizationscharacteristics as
follows: Firstly, security, privacy and confidentiality. Security can be a major issue.
(Barthelemy and Geyer, 2004) maintained that outsourcing vendors’ reputations
are not the best with information systems professionals. A company can better
control access to information and protect equipment when it is on site
(McDougall). Offshore assets and information in the server or possession of
another company are much harder to protect, such as, customers background
details, profiles and others. Therefore, customers’ information needs to be
protected and, almost as importantly, feel protected (Thibodeau).
 Secondly, the quality of personnel and work cannot always be guaranteed.
Companies or organizations could face low quality or huge delays in work
because they are at the mercy of the outsourcer. The contracting company does
not interview and hire personnel, the outsourcer does. So If outsourcer hires
poor skills workers just to fill seats, then quality is sure to suffer (Ross and
Westerman)
 Thirdly, High turnover at offshore providers is also another issue. Retention rates
are very low overseas. The means large losses of efficiency as personnel are
continually retrained (Overby).
 Fourthly, Lack of flexibility, entering a long term contract with IT computer
vendor may prove to be disadvantage when changing business or technological
circumstances or even restructuring the firm which bring a need to migrate to
alternative solution or process.
 Lastly, Impact the local jobsand competence of IT functions Innovation and even.
Outsourcing will reduce the organization’s capability for creative organizational
development. Thus, it might face a reduced competence to innovate through
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synergetic interactions (Susan Cramm, 2010). Besides, from its distance position
the vendor could have a limited potential or experience to acknowledge and
develop some specific needs of the outsourcer, this in turn, will let competitors
rapidly replicate offer same service or any advance upon any such innovations
(Mata et al., 1995).
From other perspective, researchers have seen that without the ability to outsource,
organizations could lose competitiveness. Outsourcing (IT) allows companies to rapidly
add talented people and more capacity. A firm needs good process discipline to
outsource effectively. As noted there were hundreds companies enter into outsourcing
agreements without that. This can lead to escalating costs, poor results, and difficulties
managing the relationship (Murphy, 2004).
Having the right partnership includes a good process discipline is clearly a competitive
advantage for Telecommunicationsor Bankservices providers in emerging markets like
UAE. No corporation needs to be convinced that in today’s scale-driven, technologyintensive global economy, partnerships are the supply chain’s lifeblood. (Jeffrey K. Liker
and Thomas Y. Choi, 2004).
In United Arab Emirates, national organizations such as the National Bank of Abu Dhabi
(NBAD) and Emirates Telecommunications Corporation, ETISALT, continue to outsource
work to outsourcing vendors and do partnerships with outside companies – this in turn,
has led to enhance the overall performance of the corporation and obtaining goods and
services from outside suppliers
Case Study
In mobile telecommunications there are many signs of competition at the service provider level
and we only have to walk down the street to confirm the statusby checking retail shops or
agents and discover that. Discounts, deals and different other inducements are widespread and
varied in Telecom market place. In the contrast, telecom service providers are facing difficult
challenges such as subscriber loyalty, lunch new service and increase in competition from pure
Internet-based operators. So thesecontradictions and the scale of competitionhas
forcedthetelecom corporations to sketch out a plan about how to coordinate diverse
production skills and integrate multiple streams technology to build up its core competency by
doing what they do best and letting other likevendors or suppliers, do the other stuff.
Outsourcing as strategy was an important decision that has taken by Emirates
Telecommunications Corporation, ETISALT in IT outsourcing aspect. The company carry out a
very good framework to decide what needs to be outsourced and how.
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Etisalat Overview
Etisalat is considered one of the largest telecommunications companies leading operator in the
Middle East and Africa, founded in 1976 &headquartered in UAE. The company operates in 18
countries across Asia, Middle East and Africa, servicing over 100m customers out of a total
population of approximately 1.9bn people. The company offers fixed line voice, data services,
ISPs, content providers and mobile operators.
Etisalat and UAE Telecoms Market
In UAE's telecoms market, competition has begun to chip away at Etisalat's revenues. The
picture became clearer whenEtisalat's share of the local mobile market declined to 58 % in
2009 compared with 2007, 2008 respectively with flat subscriber reduced around 10-15%
customers in the third quarter of 2009. By comparison, other mobile operation such as du in
UAE has added 159,800 new customers to its mobile business in the last quarter, and now has
about 37 % of the market.
By 2008–2009, the UAE market had grown highly competitive. Mobile rates were as low as 8-10
Fils per minute and ARPU— monthly average revenue per customer unit—had fallen by 30% in
three years as two telecom providers fought to capture new subscribers (Etisalat and du)
Competition Forces Change of Strategy in Etisalat
In 2006new operator du entered the market and start offering mobile services across the UAE
and internet packages in certain cities in UAE. The sector witnessed the first impact of
liberalization in terms of strong subscriber base growth (43%) during 2008.du has steadily
gained on Etisalat, getting an increasing number of mobile subscribers in 2008, 2009.
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Through the business downturn, financial crisis and competition market, Etisalat has compelled
to reduce costs while maintaining customer service levels that they are offering in order to
maintain profit levels and be ready to prosper once downturn is over.
Etisalat has suffered from a high rate of customers who are left the operator due to several
reasons; for instance, the company has noticed that there is decline in net additions as
competition from du starts to impact revenue, ARPU decreasing from AED 177m in 2007 to AED
171m in 2008, to AED 162m in 2009 and AED Dh118min 2010. The company has also found
there is a lack of wireless telecommunication network compared with alternative infrastructure
(such as fiber)and innovative mobile data serviceto rollout all UAE areas. Another issue Etisalat
faced is lack of technical and logistic support (as effective and timely responses) from company
customer services through Etisalat social media space on Twitter and Facebook during the year
2009 – 2010 to respond and reply on customers concerns, complaints and queries.
Based on what mentioned above, in 2008 Etisalat has started to build up new strategy to
branch out from traditional telecoms services, and has planned to offer a host of additional
IT/IS solutions and needs the support of sector specialists to outsource these solutions. So the
transformation has seen in the Etisalat telecom operator through:
Transformation
1
Streamline their processes
2
Improve their sourcing strategies
3
Consider new business partnerships
Adopting
Change consumer perceptions and internal service
process and culture in the face of stiff, service
orientated competition in a new de-regulated
market. (Announced a battery of groundbreaking
initiatives with the launch of EDGE - Enhancing the
Development and Growth of ETISALAT)
Etisalat picks Tech Mahindra for $ 400 mn 10 yrand
Sony Ericson as IT outsourcing vendor
Etisalat & Cisco – Singed MOU PartnershipTo Provide
Managed IT Technical Service
Etisalat &IT Outsourcing Strategy
Etisalat has worked deeply to increase and improvecapacity and improve mobile service quality
by creating comprehensive plan to adopt a new business model which is based on outsourcing
itsIT support services. In order to meet these challenges and threats, Etisalat started focus
increasingly to its value-chain partnersfor assistance, both by outsourcing logistics efforts to
third-party providers and by partnering with its valued suppliers, therefore searching for and
choosing outsourcing partner becomes one of the first stages.Etisalat believes that select
partners that complement its services will enable them to provide a total solution. It found
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that may it has specialized in one or more value chain activities and outsource the rest. And its
opportunity for the company to increase business advantage based on the insights and
innovations generated by external partners. Table below gives a clear picture about outsourcing
strategy that Etisalat followed and value-chain formto achieve its objectives.
Year
2008
2009
2010
IT Outsourcing Strategy Implemented
Started outsourcing its IT business support services to
the most specialized vendors who have global
expertise to carry out IT tasks effectively, such as IBM
and Cisco.
Established partnerships with Fujitsu, Cisco and
Juniper to get support in internet leased lines and
provide customer equipment like routers and LAN
switches.
European Computer Telecoms Group (ECT) and its
indirect sales partner Ericsson, has implemented
successful ring back tone solution for Etisalat as
outsourcing service. ECT´s solution provides WEB,
WAP, SMS and IVR interfaces in English and the local
languages
Planned to enhance productivity and improve
efficiency in line with renewed economic growth in
the UAE, In term of IT outsourcing tool, they signed
MOU agreement with HCL Technologies, a leading
global IT services provider to offering innovative ICT
(information and communication technologies)
services to customers and joint solutions around
mobility that can drive efficiencies within enterprises
Outsourced its directory device operation and
Mobile/Internet Technical Support through Etisalat
International’s Egypt Facility to save cost and
maintain customer service quality
Etisalat has selected Alcatel-Lucent (service providers
– Voice, Data and Video) to accelerate deployment of
its nationwide fiber-optic network in UAE
Partnership with TIGO Provider, a joint project was
started in deploying a national backbone, crossborder and metropolitan network to be co-run and
co-shared. Cost-savings were made by optimizing the
network, outsourcing maintenance work in telecom.
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Reason
Aiming at focus on key areas
of functioning and
competencies,namely
enhance the quality of
customer care, increasing
productivity and reduce
operating costs
Reluctant to realize functions
individually
Lack of expert knowledge and
possibility of employing
specialists in the enterprise
(Etisalat)
Good opinion about IT service
provider (reputation)
Reducing costs of functioning
of an enterprise(Etisalat)
Improvement in quality of
realizing function
Transferring responsibility to
outsourcer and Access to
expert and specialized
knowledge

13.
‘Figure 2’
As a differentiation strategy in the part of IT outsourcing level,Etisalat has found it useful to
focus more narrowly on certain value chain activities and rely on outsiders to perform the
remaining value chain activities. Theystructured and managed IT category (Figure2) correctly by
developing its infrastructure design through outsourcing framework to improve the overall
performance of its networks and build technological strategy that supports the service delivery
process to customers to overcome the drawbacks and any issues that could impact the service.
So Etisalat believes that IT business process outsourcing isn’t only about applying old tactics to
new parts of the business; it’s about new ways of capturing value, for instance;
Etisalat Issues
High competition
Lack of wireless telecommunication
network
Outsourced Solutions
In 2010 Etisalat have used its infrastructure services
integrated with private utility companies’ services
provider and Dubai Government to implement great job
of setting up various electronic ways to pay bills.
Electronic payments can be done online for services like
traffic & parking fines, mParking for parking fees, water
and electricity bills.
Build up rapidly reliably and inexpensively a wireless
telecommunication network overcoming the lack of
alternative infrastructure. Thus, Etisalat singed
agreement with INTRACOM TELECOM’s extensive
experience in wireless backhauling and access
(outsourcing Global Vendor), enables Etisalat to
effectively backhaul 2G/3G/4G traffic and provide its
business customers broadband wireless services to cover
most UAE locations
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Lack of technical and logistic support
(Etisalat social media)
Differentiation (Blue Ocean)
High end services
Impact local IT Jobs in Etisalat
In 2011 Etisalat has outsourced its customer service
social media platform to SocialEyez, the Social Media
practice of News Group International to monitor Etisalatrelated discussions generated in the UAE, provide
detailed analysis reports on user perceptions,
satisfaction, expectations, and complaints, and assist
Etisalat in its social media engagement activities
Outsourced service to make deals with most UAE banks
to do online payment facilities. This interoperable
platform will accelerate financial inclusion by allowing
customers and subscribers of multiple service providers
to use existing channels to access their accounts. It will
provide the ability to carry out transactions from one
Bank or online payment platform to a beneficiary on
another bank or account payment platform. It was a
spark for Mobile Service consumers to participate
through Etisalat
Moving up the value chain, Etisalat has partnered with
Ogle Middle East, to roll out the Ogle application to its
100 million+ mobile subscribers across the Middle East
and Africa. This is the first deployment from Aurasma –
the world’s leading Augmented Reality platform.
Augmented Reality or “AR” is an innovative technology
that transforms images and objects including brochures,
tickets or any form of printed media into actual videos or
3D animations
Etisalat has prepared a plan to shift some of IT staff
members to work in new centers within the Corporation,
or transfer them into private companies who have been
selected to provide certain services for Etisalat. Those
staff will do their duties together with the employees of
the private sector to ensure continuity of work, while
enhancing their experience from a world-renowned
international vendor
Etisalat performance after adopting the outsourcing tool during 2010, 2011 of operations has
been very impressive in the hold cost down while growing revenue and customer satisfaction
significantly. Selective global outsourcing allows Etisalat to structure its project teams by
utilizing both in-house and outsourced staff. Table (figure3) below shows the forecast
performance how it is impacted by the competition and how Etisalat has kept its positional map
in the market place and still comfortably in the lead.
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‘Figure 3’
Etisalat project mobile internet revenues also grow rapidly in 2008 and 2009 from AED 2.04bn
in 2007 to AED 3.70bn in 2008, AED 4.50bn in 2009 and to AED 5.83bn in 2012.Via IT
outsourcing, Etisalat has raised its performance and had 7 million domestic mobile subscribers
as of Sept. 30, up 11 percent from a year ago. Besides that, Etisalat has sufficient financial
leverage and excellent revenue (FY 09-10) “Exhibit 1” this in turn, has led to
 Engage in price wars with its competitors in UAE because it translates into lower prices
for service products for consumers;
 Through a great way to differentiate is to collaborate with leading IT outsourcing
company in Asia, such as leading software- hardware providers,for instance, Etisalat has
signed partnership with China-based Huawei would enable it to cover 85 per cent of the
UAE's populated areas under the advanced 4G LTE-FDD (fourth generation long-term
evolution frequency-division duplexing) network, Launched the new LTE mobile Wifi
device allowing customers the opportunity to enjoy the most reliable wireless internet
access at all times;
 Collaborate with expertise leading clouding company, Etisalat reach a conviction that
cloud computing can delivers multiple efficiencies and economies of scale, which
contribute to the reduction of energy consumption per unit of work, create a Green IT
environment and enhance Etisalat reputation in the market to adopt green marketing
approach;
 Play an ever greater role in the process of Mergers and Acquisitions. For instance,
Etisalat is looking at potential mergers, acquisitions, and divestitures to gain competitive
advantage by studying opportunities for M&A with Reliance, India’s second-biggest
cellular phone operator and Mobile Services.
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According what we have pointed out, consolidated EBITDA has grown to 4,221m AEDafter 2009
representing a year-over-year growth of 9%. EBITDA growth was mainly due to more effective
cost management outsourcingthat led to lower network cost and direct cost of sales. EBITDA
increased year-over-year by 4% to 3,291m AED leading to EBITDA margin of 60% in comparison
to 56% of the same period of 2011.
As the information in figure 3,I believe Telecom competition in the UAE is focused on price and
network quality, and I would strongly say Etisalat as one of the telecom operators that
succeeded in having a clear focused expansion strategy when the company decided to use
outsourcing strategy. A strategy backed up by solid networks infrastructure, diversified
vendors, products and services portfolio along with the unique customer interface and has
positive impact in company value chain and operation, thus has a positive reflection on the
company's revenue in last two years.
“Exhibit 1”
Note: EBITDA - Earnings before interest, taxes, depreciation and amortization
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