1. July 2013 UAE Telecommunications Sector Developments & Indicators, 2009 – 2012 4 th Annual Sector Review

2. Disclaimer 2 The TRA has compiled this report based on information received from industry, as well as from publicly reported information from other sources. Whilst 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 (2009-2012), issued July 2013

3. Table of Contents 3 Page Introduction ………………………………………………………………………………….. Economic Summary ………………………………………………………………………… 4545 Industry Background …………………………………………………………………………6 Summary of Telecommunications Indicators …………………………………………….7 Sector Contribution to UAE Economy.……………………………………………………..8 TRA Regulatory Policy and Procedures ……………………………………………………9 UAE - Rankings..........................................................................................................14 Fixed Telephony Services ………………………...………………………………………..15 Mobile Services ………………………………………………………………………….…..18 International Voice Services …………………………………………………………….….22 Internet Services …………………………………………………………………………….24 Data Services ……………………………………………………………………………….30 Annex 1: Abbreviations & Acronyms ……………..……………………………………….31 Annex 2: Usage Indicators ……………..…………………………………………………..32 Annex 3: Sources and Acknowledgments..………………………………………………..33 UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

4. 4 Introduction This report is the fourth TRA Annual Sector Review. It summaries the state of the fixed, mobile, and data telecommunications markets in the United Arab Emirates (UAE) in terms of subscribers, penetration rates, revenues, and usage (i.e. traffic volumes) for the years 2009 – 2012. 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 provided. 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 to the TRA. UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

5. Economic Summary Indicator2009201020112012 Population (1) 5,066,0005,378,4605,883,6538,209,459 GDP (billions) (2) AED 941AED 880AED 959AED 984 GDP Per CapitaAED171,107 AED 174,132AED 244,707AED 238,157 High level metrics: (1)The 2009 to 2011 population estimates are based on a TRA assumption that the population was growing at an annual rate of 6%. The large population increase shown is 2012 is based on an updated population figure reported by the National Bureau of Statistics (NBS). (2)Estimated by the IMF. Source: Ministry of Economy, National Bureau of Statistics (NBS), TRA estimation, International Monetary Fund (IMF) 5 UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

6. 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 6 Several other niche licences were granted by the TRA in 2010 and 2011, namely: Al Yah Satellite Services Company PJSC (2010), Al-Yah Advanced (2010), Star Satellite Communications (2010), Al-Maisan Satellite Communications (2011) and Media Zone Intaj FZ LLC(2011). The impact of providing these licences on the market is yet to be seen and measured. Therefore, all the data given in this report relates only to Etisalat and du, and the term “Licensee” refers only to either Etisalat or du only. UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

7. The table below sets out a range of major indicators specific to the UAE telecommunications sector for 2012. Source: 2012 Industry data Indicator Fixed Telephony Service Mobile ServiceInternet Service Subscribers 1,967,48613,775,252957,816 Revenues (Billions, AED) 2.620.43.8 Voice Minutes (Billions) 3.823.5 Not applicable (N/A) ARPU (3) (Monthly, AED) 116133346 AMPU (4) (Monthly, Minutes) 169153N/A (3) Average Revenue per User (ARPU) : Calculated by dividing the total revenues for a given period by the average number of subscribers during the same period. (3) Average Minutes per User (AMPU ): Calculated by dividing the total minutes for a given period by the average number of subscribers during the same period. Summary of Main Telecommunications Indicators 7 UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

8. The UAE Telecommunications sector plays an extremely important role in the economy. In 2012, it contributed around 5% to UAE GDP and employed 7,961 persons. 40% of the sector’s employees were Emirati. Sector Contribution to UAE Economy Contribution of UAE Telecommunications Sector to UAE GDP 20094.9% 20105.7% 20115.15% 20125.0% Telecommunications Industry Employees (7) 8 Emiratization Employees (6) Total investment represents Licensees’ cash flows used in investing activities. (7) Total telecommunications employees represents all employees from TRA,Etisalat and du Total Investment (6) (AED, millions) UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

9. 9 TRA Regulatory Policy and Procedures - Consultations During 2011 and 2012, the TRA conducted the following consultations all of which were published on the TRA’s website. Public Consultation on Competition Assessment and Proposed Remedies in Relevant Markets. Public Consultation on the definition of Relevant Markets for the Purpose of Ex Ante Market Reviews. Public Consultation on Market Definition and Competition Assessment Guidelines. Public Consultation on Remedies for ex-Ante Regulation of the UAE Telecommunications Sector. Consultation Concerning Amendments to an Existing Regulatory Instrument: Cost Accounting, Accounting Separation and LRIC Modeling. Consultation Procedures. Public Consultation on “Building the Digital Society”-National ICT Policy 2013-2016. Public Consultation on Dispute Resolution Procedures. Public Consultation on Space Telecommunications Policy Outline. Public Consultation on TRA Spectrum Band Plan. Amendment to the Public Telecommunications Licenses issued to Etisalat and du. Public Consultation on the Adoption of Green ICT Best practices in the UAE. Public Consultation on Spectrum Regulatory Instruments. Public Consultation regarding Draft Mobile Telecommunications Apparatus Anti Theft Instructions. Public Consultation on Draft Regulatory Instrument - Consumer Protection Regulations. Stakeholder Initiated Consultation regarding Electronic Communications, Mobile Spam Policy and Privacy of Consumer Information Policy. Regulatory Instruments (Second Batch) Spectrum Allocation and Assignment v1.0 o Cellular Systems Coverage Measurement v1.0 o Use of 2.4 GHZ and 5.8 GHZ bands for WLAN and RLAN v1.0 o Short Range Devices v1.0 The TRA also conducted a number of closed consultations in accordance with its procedures. UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

10. 10 TRA Regulatory Policy and Procedures - Regulatory Instruments Issued or Amended During 2011 and 2012, the TRA issued or amended the following regulatory instruments: Determination: Competition Assessment of Relevant Markets-29 March 2012. Directive No. (3) 2012: Database Electronic Query Service Amendment to the Interconnection. Directive No. (1) of 2012 Incorporation of Carrier Pre-Selection Charges into the Interconnection Agreement. Interconnection Pricing Policy, V.1.5,15 December 2012. Determination No (1) of 2011 - Relevant Markets for Telecommunication Services and Related Products in the UAE. Update on TRA Determination No 3 of 2010 - Mobile Site Sharing Charges. Directive No (3) of 2011 - Twice Annual Audit of Billing Systems. Determination No (2) of 2011 - Carrier Pre-Selection Charges. Cost Accounting, Accounting Separation and LRIC Modeling Instructions V 3.1. A number of Determinations specifically related to the on-going project to secure competition in fixed-line services through bitstream access and network sharing. National Emergency Plan for the Telecom Sector (NEP-T). Regulatory Policy on Non-Ionizing Radiation Limits for Telecommunications Networks. Regulatory Policy regarding VoIP. Regulatory Policy regarding Unsolicited Electronic Communications. Regulations of Mobile Telecommunications Apparatus – International Mobile Equipment Identity Numbers (2011). Directives No (6) & (7) of 2011 – Duplicate International Mobile Equipment Identity (IMEI). Regulatory Policy regarding Registration Requirements for Mobile Consumers (2011)..emarat Arabic Domain Name Policy V 1.0..emarat Launch Policy V 1.0. 13 policies related to.ae Domain Administration (amendment). Instructions on Mobile Telecommunications Apparatus Anti Theft V1.0 in 2012. Directives No (4) & (5) of 2012 – Location Based Services. UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

11. 11 Consumer Complaints PCRs (Price Control Requests) The TRA is required to assess all requests from UAE Licensees to change retail prices. In 2012, the TRA received 285 price approval requests (PCRs) of which 95% were approved. In 2012, the TRA handled 1493 complaints from business and residential consumers concerning issues with Licensees. The increase in the number of complaints may be a result of increased consumer awareness regarding the services provided by the TRA to consumers. TRA Regulatory Policy and Procedures - Price Control and Consumer Complaints Number of PCRs Number of Complaints UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

12. 12 Spectrum Allocations Processed TRA Regulatory Policy and Procedures - Spectrum Applications Number of Allocations The TRA manages the Frequency Spectrum in the UAE. The chart below shows the number of allocation applications processed by the TRA during the period from 2010 to 2012. UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

13. 13 TRA Regulatory Policy and Procedures – Spectrum Interference Complaints Resolved and Support to Broadcasting and Production Activities Number of Frequency Assignments to Support Broadcasting and Production Activities UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

14. 14 UAE Rankings in Various International Studies (2012-2013) The UAE ranked 2 nd of all the Arab states in the 2012-2013 Networked Readiness Index (NRI) study issued by the World Economic Forum, and 25 th among all 144 countries assessed. The UAE ranked overall 45 th in the world in the ICT Development Index (IDI) in 2012. This was the 3 rd highest ranking among all the GCC and Arab states. The UAE ranked 2 nd of all the GCC and Arab states in the IDI ICT Usage sub- index. Key findings include the following: -The UAE ranked 2 nd in the world in the fixed telephony sub-basket -The UAE ranked 5 th in the world for the mobile cellular sub-basket -The UAE ranked 6 th in the world in the ICT Price Basket UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

15. Fixed Telephony – Number of Fixed Lines The fall in the fixed line penetration level shown in the chart below between 2011 and 2012 was due to a change in the way the population was estimated. The significant increase in the number of fixed line subscribers from 2011 was largely due to the inclusion of fixed lines bundled with broadband in some instances TV. These bundled fixed lines were not reported to the TRA in 2010 and were therefore not counted in earlier statistics. The fixed line penetration rate as of December 2012 was 24%. Number of Fixed Lines (‘000s) Business vs Residential Fixed Lines (‘000s) 15 Fixed Lines, thousands UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

16. Fixed Telephony – Revenues (8) Total fixed revenues include fixed telephony, calls from Payphone and calls to directory enquiry. It does not include revenue generated from the monthly charges from Double Play and Triple Play subscriptions. Fixed telephony revenues declined by 8% between 2011 and 2012, international voice revenues fell by 10%, and domestic voice revenues fell by 9%. International voice revenues per line in 2012 were around half what they were in 2009. Total Fixed Telephony Revenues (8) (AED, millions) Monthly Fixed Line ARPU, AED 16 Millions, AED ARPU, AED Breakdown of Fixed Telephony Revenues (AED, millions ) Revenue, millions UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

17. Fixed Telephony – Usage Total fixed telephony minutes decreased by 7% between 2011 and 2012. Calls to mobile phones represented 65% of total voice minutes from fixed lines in 2012. Monthly Fixed Line AMPU (9) Minutes Breakdown of Total Annual Voice Minutes (Billions ) 17 Minutes, Millions AMPU, Minutes Total Annual Voice Minutes (millions) Minutes, Millions (9) In the 2nd Annual Review, the TRA used subscriptions as at the end of December to calculate average revenues and usage. In this report, the TRA has used average subscriptions over the calendar year. (10) Local Calls are defined as any call from a fixed line using a single switching center, i.e. the a call both originates and terminates within a local calling area. (9) UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

18. Mobile Services – Active Subscriptions (10)‘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. (11) Prepaid figures include subscribers on visitor SIM packages. In 2012, the reported mobile penetration rate fell to 168%. However, this fall was due to the change in the way the population of the UAE was estimated. The number of active mobile subscriptions increased by 17.5% between 2011 and 2012. In 2012, postpaid subscriptions accounted for 12% of total mobile subscriptions. Subscriptions, Thousands Penetration Active Mobile Subscriptions (10) (‘000s) Breakdown of Prepaid vs. Postpaid Subscriptions (11) 18 Percentage of subscriptions UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

19. Mobile Services – Revenue Revenues generated from mobile services increased by 2.6% in 2012. The majority of the revenue increase came from postpaid service which increased 12.5% from the previous year. The relative difference in the revenues generated from prepaid and postpaid is decreasing overtime. The small decrease in prepaid revenues in 2012 was offset by a considerable increase in postpaid revenues. Total Mobile Revenues (AED millions) 19 (12) Excluding Blackberry revenue, as that level of the revenue segregation is not available ARPU, AED Millions, AED Mobile Monthly ARPU Breakdown of Total Revenue (12) (AED, millions) UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

20. Mobile Services – Usage (Minutes) Total annual mobile originated call minutes increased by 5.6% between 2011 and 2012. International call minutes decreased by 3.6% between 2011 and 2012. The average minutes of usage of a postpaid subscribers is more than double that of a prepaid subscribers. Mobile Average Minutes Per User (AMPU) 20 AMPU, Monthly Breakdown of Total Annual Voice Minutes (millions ) Voice Minutes, Millions Total Annual Voice Minutes (millions ) Minutes, Millions UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

21. 21 Mobile Services – Usage (SMS & MMS) % Growth 2009-2010 % Growth 2010-2011 % Growth 2011-2012 SMS-9%-11%-6% MMS-25%-19%-15% The total number of SMS messages sent decreased by 24% between 2009 and 2012, and 6% between 2011 to 2012 alone. The total number of MMS messages sent decreased by 15% between 2011 and 2012. MMS, Millions (13) SMS includes domestic SMS, international SMS and SMSs sent by outbound roamers. Total Number of SMS (13) SMS, Millions Total Number of MMS UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

22. 22 International Voice Services Breakdown of International Outgoing Traffic (Millions, Minutes) Breakdown of International Revenues (AED Millions) International outgoing Minutes % growth 2009- 2010 % growth 2010- 2011 % growth 2011- 2012 From Fixed-23%-18%-8% From Mobile11%26%-3.6% International Revenues % growth 2009- 2010 % growth 2010- 2011 % growth 2011- 2012 From Fixed-26%-22%-10% From Mobile-0.5%-2%-3% Minutes, Millions Millions, AED 2012 recorded the first decline in international outgoing Minutes originating from mobile phones. Revenues generated from international calls has progressively decreased over the last 3 years UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

23. 23 International Voice Services - 2012 International Call Minutes (Fixed + Mobile ) by destination (top 8 countries) (14) Calls to India, Pakistan, the Philippines and Bangladesh represented 51% of total outgoing international traffic in 2012. (14) Top 8 countries refer to most popular destinations of outgoing calls. international traffic, Millions UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

24. Internet - All Subscribers The large decline in the number of internet subscribers in 2012 was due to changes in the methodology for recording dial-up subscribers. As from 2012, the TRA began reporting only the number of ‘active’ dial-up accounts rather than the total number of dial-up accounts. ’Active’ accounts refer to those that have been used in the previous 90 days. As of December 2012, there were 957,816 Internet subscribers in the UAE. The percentage of internet subscriptions by fibre technology increased by 37.2% between December 2011 and December 2012. Total Internet Subscribers in Millions (15) 24 Internet Subscribers, millions Penetration (15) The Internet User Penetration rate was calculated using the ITU methodology which assumes there are 2.5 Internet users per Internet subscription. Internet Subscribers, thousands Internet Subscription by Technology (thousands) UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

25. 25 Internet - Broadband Subscribers Broadband Subscribers (17) The total number of broadband subscribers increased by 9.3% between 2011 and 2012. The penetration level of broadband was 11.6% as at December 2012. Broadband Subscribers Penetration Broadband Subscription shares by Package, 2012 (18) (17) The Broadband User Penetration rate is calculated using the ITU methodology which assumes that there are 2.5 Internet users per Internet subscription. (18) Stand alone includes copper, WiMax and Fibre connections. Double Play subscriptions refer to bundled landline and broadband packages while Triple Play subscriptions refer to bundled landline, broadband and TV packages. The TRA began the collection of these statistics in 2011. UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

26. Residential Internet Subscribers, (‘000s)Business Internet Subscribers, (‘000s) Service Subscriber growth 2009 - 2010 Subscriber growth 2010 - 2011 Subscriber growth 2011 - 2012 Residential dial-up -22%-26%-99% Business dial-up 14%1.1%-99% Residential broadband13%11%10% Business broadband 30%11%6% 26 Residential Subscribers, Thousands Business Subscribers, Thousand Residential and Business Internet Subscribers UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

27. Distribution of Business Broadband Subscribers by Internet Speed 2009 - 2012 27 Distribution of Residential Broadband Subscribers by Internet Speed 2009 - 2012 Business Broadband Subscribers Residential Broadband Subscribers The Distribution of Residential and Business Broadband Subscribers UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

28. Internet Services – Revenue Internet revenues increased by 15.2% in 2012. 28 Total Internet Revenues (AED, millions) Revenue, AED UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

29. Internet Services – ARPU Broadband Internet ARPUs have increased over time. This appears to be attributable to subscribers moving to higher speed broadband packages. Business broadband monthly ARPU is significantly higher than that of residential subscriptions. Broadband Monthly ARPU, AED 29 Broadband ARPU, AED UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

30. Data Services – Leased Lines The number of leased line subscribers increased by 9.8% in 2012 compared to the previous year. Leased line revenues increased by 4.6%. Total Leased Line Subscribers Total Revenue (AED millions) 30 Number of Subscribers Revenue in millions UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

31. 31 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 Fibre To The Home ISDN Integrated Services Digital Network ADSL Asymmetric Digital Subscriber Line Kbps Kilobits Per Second Mbps Megabits Per Second PCR Price Control Request Annex 1 UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

32. 32 Annex 2 Fixed Lines Indicators for the year 2012 Average duration of domestic calls from fixed lines 1.94 min Average revenue of domestic calls from fixed lines AED 0.34 /min Average international calls duration from fixed lines4.74 min Average revenue from International call from fixed linesAED1.85/min Average number of international call minutes per fixed line19.66 min/month Mobile Indicators for the year 2012 Average duration of mobile domestic voice calls 1.64 min Average revenue per mobile domestic calls AED 0.32 /min Average international call duration3.15 min Average revenue from International callsAED 1.42 /min Average international minutes per subscriber33.52 min/month Average national SMSs per subscriber13 SMS/month Average international SMSs per subscriber4.33 SMS/month Usage Indicators UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013

33. 33 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 2009 – 2012 Provided to the TRA by du and Etisalat on a monthly basis. TRA Mobile Networks Benchmarking studieswww.tra.gov.ae UAE Telecommunications Sector Developments & Indicators (2009-2012), issued July 2013