Dubai-based Emirates Integrated Telecommunications Company (EITC), the parent of Dubai-based telecoms firm Du, is transitioning into a company with a dual brand following the signing of a brand licensing agreement with UKs Virgin Mobile.
The agreement signed between the two companies entails the introduction of Virgin Mobile services in the UAE using the same resources including network infrastructure used by Du.
As in other markets, Virgin Mobile will focus on consumer-orientated mobile services using what it calls a digital business model. Dus business model catering to a broader swathe of customers from consumers to enterprises will remain unchanged, according to Osman Sultan, EITC chief executive officer.
A separate management team and staff within EITC headed by Karim Ben Kirane will operate Virgin Mobile while Sultan retains his role as CEO of EITC.
As the parent company, EITC, which trades under the name Du at the Dubai Financial Market, will be accountable for all regulatory obligations and royalty fees as well as revenues from operating the two brands.
Our aim is to firmly establish the UAE as a power centre for telecommunications by introducing innovative brands that will drive the connectivity agenda in new and unexpected directions, Sultan said.
Sultan did not specify the exact date when Virgin Mobile will start accepting subscribers.
EITCs net profits have been declining for eight successive quarters.
A steady increase in the royalty or tax paid to the government has been blamed as a major contributor to the companys declining profit. In 2016, the firm is obliged to pay 15 per cent of its regulated revenue and 30 per cent of its regulated profits in royalties. Regulated revenue and profits exclude those generated by activities such as mobile handset sales, among others.
The licensing agreement between EITC and UK-based firm helped the UAE avoid having a third telecoms operator and allowed EITC and Etisalat, the countrys first and largest telecoms provider, to maintain their duopoly.