1. May 2011 UAE Telecommunications Sector Developments & Indicators, 2007 – 2010 2 nd Annual Sector Review

2. Table of Contents 2 UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011 Page Introduction …………………………………………………………………………………..3 Disclaimer...……………………………………………………………………………….....4 Economic Summary …………………………………………………………………………5 Summary of Telecommunications Indicators …………………………………………….6 Industry Background ………………………………………………………………………..7 Sector Contribution to UAE Economy……………………………………………………..8 Fixed Telephony Services ………………………...………………………………………..9 Mobile Services ………………………………………………………………………….…..12 International Voice Services …………………………………………………………….….16 Internet Services …………………………………………………………………………….18 Data Services ……………………………………………………………………………….24 Revenue & Usage Comparison Across Services …………………….………………….25 Annex1 : Abbreviations & Acronyms ……………..……………………………………….26 Annex2 : Usage Indicators ……………..…………………………………………………..27 Annex3 : Sources and Acknowledgments..………………………………………………..28 Annex4 : Additional Charts from 2007-2009 Review ……………………………………..29

3. 3 Introduction This report is the second TRA Annual Sector Review. It summaries the state of the fixed, mobile, and data telecommunications services in the United Arab Emirates (UAE) in terms of subscribers, penetration, revenues and usage (traffic volumes) for the years 2007 – 2010. The report also outlines the contribution of the telecommunications sector to the UAE economy. The data contained in this report is published in aggregate form only and statistics for individual licensees are not listed. The TRA has taken this step to protect the commercially sensitive information of each Licensee while recognising that for the purpose of transparency, sound regulatory practice, and to aid in the development of competition a publication of this nature is warranted. The TRA wishes to thank each of Emirates Telecommunications Corporation (Etisalat) and Emirates Integrated Telecommunications Company PJSC (du) for their respective contributions to this report through the regular supply of sector specific information and statistics by the licensees to the TRA. UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

4. Disclaimer 4 The TRA has compiled this report based on information received from industry, as well as from publicly reported information from other sources. While this report and the information contained herein is, to the best knowledge of the TRA, free from error, the TRA does not make any representations or warranties, either express or implied, as to the accuracy of the information. Furthermore, the TRA is not liable for any inaccuracies, errors or omissions in the information contained in this document or any harm that may be incurred in reliance thereon. If a reader wishes to use any of the information contained in this report as the basis for any decision, whether or not related to investment, the reader is obliged to determine the accuracy of the same. Furthermore, the information is provided for educational purposes only and is not intended to be a recommendation to take any particular course of action. UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

5. Economic Summary Indicator2007200820092010 Population4,488,0004,765,0005,066,0005,378,460 Number of Households663,263707,150747,817 790,822 Population Growth (estimated rate (1) ) 6% GDP (billions)AED 758AED 934AED 941 (2) AED 880 (2) GDP Per CapitaAED 169,280AED 196,512AED 171,107 (2) AED 174,132 (2) The table below provides some high level metrics for the UAE economy: (1) The TRA has calculated the 6% population growth rate based on the Ministry of Economy and National Bureau of Statistics historical publications (2) Estimated by IMF 1 US$= AED 3.6732001304 as of December 31, 2010, XE - Universal Currency Converter‏XE - Universal Currency Converter‏ Source: Ministry of Economy, TRA estimation,IMF 5 UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

6. The table below sets out a range of main indicators specific to the UAE telecommunications sector for 2010: Source: 2010 Industry data, Indicator Fixed Telephony Service Mobile ServiceInternet Service Subscribers 1,460,98510,926,0191,374,903 Revenues(Billions, AED) 3.218.42.7 Voice Minutes (Billions) 4.321.6 Not applicable (n/a) ARPU (3) (Monthly, AED) 184140166 AMPU (4) (Monthly, Minutes) 248165n/a (3) ARPU : Calculated by dividing the total revenues for a given period by the average number of subscribers during such period (4) AMPU : Calculated by dividing the total minutes for a given period by the average number of subscribers during such period Summary of Main Telecommunications Indicators 6 UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

7. Industry Background The UAE telecommunications sector is currently served by two integrated telecommunications operators, Emirates Telecommunications Corporation (Etisalat) and Emirates Integrated Telecommunications Company PJSC (du). Competition in the UAE telecommunications sector started de facto in early 2007 when du, the second licensee, launched its mobile network services ending nearly 30 years of telecommunications monopoly by Etisalat. Today, the sector continues to be served by both Etisalat and du across multiple services as illustrated in the table below: LicenseeFixedMobileInternetLeased Lines Other data services Etisalat du 7 In 2010, the TRA issued a satellite services licence to Al Yah Satellite Services Company PJSC to provide telecommunications services by satellite technology. This licensee is yet not providing services and all the data given in this report relates only to Etisalat and du. Therefore, the term “licensee” in this report refers to either Etisalat or du. UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

8. The UAE Telecommunications Sector plays an extremely important role in the economy. It contributed nearly 5.3% to UAE GDP and employed 11,528 persons in 2010. Sector Contribution to UAE Economy Contribution of UAE Telecommunications Sector to UAE GDP 20074.1% 20084.4% 20094.9% 20105.3% Telecommunications Industry Employees (5) Total investment represents Licensees’ cash flows used in investing activities. 8 Emiratization Total Investment (5) (AED, millions) UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011 Employees

9. Fixed Telephony – Number of Fixed Lines At the end of 2010, there were approximately 1.5 million fixed telephony lines in the UAE. This represents 6% decrease from 2009. The number of residential lines between 2009 – 2010 fell by 20% while number of business lines increased by 7%. Fixed line penetration rates was 26.4 % at the end of 2010. Number of Fixed Lines (6) (1000s) Business Vs Residential Fixed Lines(1000s) 9 Fixed Lines, 1000s Penetration (6) Fixed lines include ISDN fixed lines (does not include double and triple play internet subscribers of du and Etisalat) UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

10. Fixed Telephony – Revenues (7) Total fixed revenues include fixed telephony, calls from Payphone and calls to directory enquiry Fixed telephony revenues declined by 16% between 2009 and 2010, from AED 3,827 to AED 3,223 million. Total Fixed Telephony Revenues (7) (AED, millions) Monthly Fixed Line ARPU, AED 10 Millions, AED ARPU, AED UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011 Breakdown of Fixed Telephony Revenues (AED, millions ) Revenue, millions

11. Fixed Telephony – Usage Total fixed telephony minutes decreased by 16% between 2009 and 2010 Calls to mobile represented 64% of total voice minutes from fixed lines in 2010. Monthly Fixed Line AMPU, Minutes Breakdown of Total Annual Voice Minutes (millions ) 11 Minutes, Millions AMPU, Minutes UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011 Total Annual Voice Minutes (millions) Minutes, Millions

12. Mobile Services – Active Subscriptions (8) Active is defined as any subscriber who has made or received a voice or video call in the preceding 90 days, or has sent an SMS or MMS during that period. (9) Prepaid figures include mobile visitors. The number of active mobile subscriptions increased by 2.4% between December 2009 and December 2010. The number of active mobile subscriptions per 100 inhabitants was 197 by December 2010 which represented the highest mobile penetration rate worldwide. Subscriptions, 1000s Penetration Active Mobile Subscriptions (8) (1000s) Breakdown of Prepaid vs. Postpaid Subscriptions (9) 12 Percentage of subscriptions UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011 In 2010, the share of postpaid subscriptions reached 11% of total mobile subscriptions compared to 9% in 2009.

13. Mobile Services – Revenue Revenues generated from mobile services increased by 3.4% in 2010, from AED 17,787 million to AED 18,400 million. Mobile monthly Average Revenue Per User (ARPU) increased by 0.7% from AED 139 in 2009 to AED 140 in 2010. Total Mobile Revenues (AED millions) 13 (10) Excluding mobile data revenue. (11) In the 1 st Annual Review, the TRA used average subscriptions to calculate ARPU while in this report the TRA has used subscriptions as end of December, 2010 ARPU, AED Millions, AED Mobile Monthly ARPU (11) UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011 Breakdown of Total Revenue (10) (AED, millions)

14. Mobile Services – Usage (Minutes) Total annual mobile originated call minutes increased by 6% between 2009 and 2010. International call minutes increased by 11% between 2009 - 2010. Mobile Average Minutes Per User/Subscription (AMPU) 14 AMPU, Monthly Breakdown of Total Annual Voice Minutes (millions ) Voice Minutes, Millions UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011 Total Annual Voice Minutes (millions ) Minutes, Millions

15. 15 Mobile Services – Usage (SMS & MMS) % Growth 2007-2008 % Growth 2008-2009 % Growth 2009-2010 SMS163%219%-9% MMS61%58%-25% Total SMS messages sent decreased by 9% between 2009 and 2010. Total MMS messages sent decreased by 25% between 2009 and 2010. MMS, Millions (12) SMS includes domestic SMS, international SMS and SMS sent by outbound roamers. SMS (12) SMS, Millions MMS UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

16. 16 International Voice Services Breakdown of International Outgoing Traffic (Millions, Minutes) Breakdown of International Revenues (AED Millions) International outgoing Minutes % growth 2007-2008 % growth 2008- 2009 % growth 2009- 2010 From Fixed- 2%37%-23% From Mobile15%- 0.03%11% International Revenues % growth 2007-2008 % growth 2008- 2009 % growth 2009- 2010 From Fixed- 2%35%-26% From Mobile24%- 9%-0.5% Minutes, Millions Millions, AED UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

17. 17 International Voice Services - 2010 International Traffic (Fixed & Mobile ) by Outgoing (top 10 countries) (13) Calls to India, Pakistan, Egypt and Bangladesh represented 53 % of the total outgoing international traffic in 2010. 31% of the total incoming international traffic in 2010 came from India. UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011 (13) sorted by outgoing traffic Percentages of international traffic

18. Internet - All Subscribers As at December 2010, there were over 1.37 million Internet subscribers in the UAE. As at December 2010, 57 % of total Internet subscribers in the UAE were Broadband. The penetration of Internet users was 62 % in 2010 which was among highest rates in the region. Total Internet Subscribers 18 Internet Subscribers Penetration Internet User Penetration rate calculated by using the ITU methodology which assumes there are 2.5 Internet users per Internet subscription. Internet Subscribers, 1000s Internet Subscription by Access Type (1000s) UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

19. 19 Internet - Broadband Subscribers Broadband Subscribers Total number of broadband subscribers increased by 14.4% between 2009 – 2010. Penetration of broadband user increased from 33.1% in 2009 to 35.6% in 2010. Broadband Subscribers Broadband User Penetration rate calculated by using the ITU methodology which assumes there are 2.5 Internet users per Internet subscription. Penetration UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

20. Residential Internet Subscribers, (1000s)Business Internet Subscribers, (1000s) Service Subscribers growth 2007 - 2008 Subscribers growth 2008 - 2009 Subscribers growth 2009 - 2010 Residential dial-up 20%9%-22% Business dial-up 43%35%14% Residential broadband 86%22%13% Business broadband 67%42%30% 20 Residential Subscribers, 1000s Business Subscribers, 1000s Residential and Business Subscribers UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

21. Distribution of Business Broadband Subscribers by Internet Speed 2007 - 2010 21 Distribution of Residential Broadband Subscribers by Internet Speed 2007 - 2010 Business Broadband Subscribers Residential Broadband Subscribers The Distribution of Residential and Business Broadband Subscribers UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

22. Internet Services – Revenue Internet revenues increased by 8% between 2009 and 2010 from AED 2,532 million to AED 2,733 million. This revenue growth can be attributed in part to the increasing proportion of subscribers on broadband rather than dial-up packages. 22 Total Internet Revenue (AED, millions) Revenue, AED UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

23. Internet Services – ARPU Internet ARPUs have increased as the proportion of subscribers taking broadband packages has increased. Business broadband monthly ARPU is significantly higher than that for other types of Internet subscriptions. Internet Total Monthly ARPU, AED Dial-up Monthly ARPU, AED Broadband Monthly ARPU, AED 23 ARPU, AED Dial-up ARPU, AED Broadband ARPU, AED UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

24. Data Services – Leased Lines The number of leased lines subscribers increased by 119% between December 2009 and December 2010. This leap in number of leased line subscribers is due to the inclusion of virtual leased line services. Leased line revenue increased by 28% to AED 1,128 million in 2010. Total Leased Lines SubscribersTotal Revenue (AED millions) 24 UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

25. 25 Usage Comparison Across Services (millions, Minutes) Revenue Comparison Across Services (AED millions) Minutes, Millions Millions, AED Revenue & Usage Comparison Across Services UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

26. 26 Abbreviations & Acronyms UAE United Arab Emirates TRA Telecommunications Regulatory Authority ITU International Telecommunication Union IMF International Monetary Fund AED United Arab Emirates Dirham GDP Gross Domestic Product ARPU Average Revenue Per User AMPU Average Minutes Per User SMS Short Message Service MMS Multimedia Message Service FTTH Fiber To The Home ISDN Integrated Services Digital Network ADSL Asymmetric Digital Subscriber Line Kbps Kilobits Per Second Mbps Megabit s Per Second Annex -1 UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

27. 27 Annex-2 UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011 Fixed Lines Indicators for the year 2010 Average duration of domestic call from fixed line 1.97 min Average Revenue of domestic call from fixed line AED 0.35 /min Average International call duration from fixed line4.49 min Average Revenue from International call from fixed lineAED1.99/min Average International minutes by Fixed Line34 min/month Mobile Indicators for the year 2010 Average duration of mobile domestic voice call 1.71 min Average Revenue of mobile domestic call AED 0.35 /min Average International call duration3.12 min Average Revenue from International callAED1.83/min Average International minutes per user32 min/month Average National SMSs per subscriber19 SMS/month Average International SMSs per subscriber5 SMS/month Usage Indicators

28. 28 Annex-3 Sources and Acknowledgments Ministry of Economy (MoE) http://www.economy.gov.ae International Monetary Fund (IMF) www.imf.org/ International Telecommunication Union (ITU)www.itu.int/ Industry statistics 2007 – 2010 Provided to the TRA by du and Etisalat on a monthly basis. UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011

29. 29 Annex-4: Relevant Graph(s) included in 1 st Review (2007-2009) International Voice Services - 2009 International Traffic (Fixed & Mobile ) by Destination (top 10 countries) India, Pakistan, Egypt and Philippines represent 51% of the total outgoing international traffic. India and Pakistan represent 48% of the total incoming international traffic. UAE Telecommunications Sector Developments & Indicators (2007-2010), issued May 2011