January 31, 2017 / 11:53 AM / 3 years ago

UAE's du acquires license to operate Virgin Mobile service

DUBAI (Reuters) - The United Arab Emirates’ second largest telecoms company has acquired a license from British entrepreneur Richard Branson’s privately owned Virgin Group to operate Virgin Mobile-branded services in the country.

Emirates Integrated Telecommunications Co (EITC), the holding company of operator du DU.DU, will launch services using the Virgin Mobile brand in the UAE “within weeks,” EITC’s chief executive Osman Sultan said on Tuesday.

EITC’s license term is for over five years, granting it full rights to ownership, management and operation of the brand in the UAE, Sultan said at a news conference in Dubai. An EITC spokesman told Reuters the license was bought from the Virgin Group.

Virgin Mobile will operate using EITC’s network and infrastructure in the same way that du does but be run by a separate business unit under EITC, Sultan said.

It will be the only foreign-branded telecom service operating in the UAE.

Former Virgin Mobile Saudi Arabia Chief Executive Karim Benkirane has been appointed managing director of the UAE brand and will report to Sultan.

The UAE is the third Middle East country to adopt the Virgin Mobile brand after Saudi Arabia and Qatar. Ooredoo ORDS.QA, then branded QTel, was ordered to close its Virgin Mobile Services by the country’s regulator in 2011 while Virgin Mobile Saudi Arabia continues to operate.

The UAE Virgin Mobile brand and du will not compete head-to-head, Sultan said, with the Virgin brand to focus on consumers.

Du is the UAE’s second largest telecoms network operator after ending rival Etisalat’s ETEL.AD domestic monopoly in 2007.

The financial performance of the Virgin Mobile business will contribute to EITC’s quarterly results, the same way that du does, which are published on the Dubai bourse under the name “du,” Sultan said, adding that the listing name could be changed going forward.

EITC is launching Virgin Mobile amid a months-long restructuring that has seen “tens” of job cuts, Sultan said.

The company’s financial performance has been under pressure since late 2014 as the pace of growth in the mobile market is unable to keep up with the increasing royalty rates paid to the government.

“Streamlining an organization means that you find pockets of efficiency and some positions have been made redundant,” Sultan told reporters. “I triggered this process in April/May last year.”

Sultan also said the government had yet to notify EITC of the royalty rate for 2017.

(This version of the story corrects fourth paragraph to read “Sultan said” instead of “he said”)

Reporting by Alexander Cornwell in Dubai; Editing by Greg Mahlich

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