EMIRATES Telecommunications Company (Etisalat) is gearing up to break new ground in the Gulf communications market this year. In a move designed to meet the technological challenges of the next century, the joint stock company is all set to launch an estimated $1,200 million project to purchase and launch two satellites. It is Etisalat's ambition to be at the cutting edge of technological innovation and to meet the strong demand for its services.

The main element of the programme will be the Thurayya satellite system. Costing $900 million-lOGO million to build and launch, it will operate from a fixed orbit and provide services, such as audio, data and facsimile communications, to mobile users in the region. A new company will be formed with international partners to execute the project. 'We have already completed a lot of negotiations on this and the response has been good,' Etisalat general manager All Salem al-Owais said after a board meeting on 23 January. The second system, known as Emarsat, is expected to cost $250 million, and be used for fixedline communications and television broadcasting.

Both systems will help Etisalat in the constant struggle to stay ahead of surging demand for its services. In 1995, 57,000 new lines were brought into service on the public network, raising the total number of operational lines to 672,000. Etisalat estimates future annual growth in demand of 10 per cent.

A recent tender for the addition of 110,000 lines, is expected to be split four ways. Germany's Siemens has received a letter of intent to install 50,000 lines. The remaining 60,000 lines are likely to be shared out among Etisalat's other traditional suppliers - France's Alcatel, Japan's Fujitsu and Sweden's Ericsson. Industry sources also say that Etisalat is considering an even larger tender for new switching capacity of 180,000 lines.

Demand in the GSM network is growing at an even faster rate. In 1995, the number of subscribers rose by a staggering 41 per cent to 129,000, just below the network's estimated full capacity of about 150,000 lines. Expansion projects are being carried out all the time. Last May, Alcatel was contracted to install an extra 50,000 GSM lines in Abu Dhabi emirate. In the autumn, Ericsson picked up a $23 million contract for a 10,000-line network for the Dubai area.

By the end of the decade, the size of the local GSM market is expected to have risen to between 500,000-600,000 lines. Of the total, around half of the lines could be provided through the Thurayya satellite system.

The paging network is also witnessing strong growth, with the number of subscribers rising by 35,000 to 217,000 last year. The Internet service brought into operation last September, has over 3,000 subscribers.

Etisalat's other main focus is on the expansion of its fibre optic network, necessary due to rising international demand and as the foundation for new local services, such as cable television and passive optical networks. By 1997, direct fibre optic links will have been established with Qatar, Kuwait and Bahrain. In the same year, the FLAG global network, to which the UAE will have a link through Fujairah, will come into operation. Etisalat is also actively considering a fibre optic link to Saudi Arabia.

Etisalat is a profitable utility and private investors, who own 40 per cent of total company stock, are rewarded with substantial dividends. Profits are likely to have exceeded Dh 1,300 million in 1995. There are no plans to change what has proven to be a winning formula.