Etisalat’s chief corporate affairs officer Nasser Bin Obood believes it is time for the UAE’s telecoms regulator, TRA to allow the operator to exercise greater flexibility with respect to the setting of competitive tariffs. Given Etisalat’s incumbent position in the UAE, the telco is deemed to have significant market power and as such has its pricing plans and tariffs heavily regulated by the TRA.

“We cannot push into some of the price points that customers would like,” Bin Obood said at the GSM-3G Middle East conference in Dubai this morning. “The time has come for the incumbent to have some relief (from the regulator),” he added.

Bin Obood referred to the fact that market competitor Du had recently announced the addition of its three millionth mobile subscriber, suggesting the second operator is now of sufficient size for there to be a move to a more competitive pricing regime in the UAE.

Only last month Du announced it had made a net profit of AED 31 million (US$8.45 million) for the three months to end-September, representing its first net profit since the company started trading in February 2007 and a year ahead of the financial plan announced during the IPO.

In response to a question posed by Comm., Bin Obood said that while Du had achieved a number of financial and operational milestones ahead of schedule, Etisalat continued to be secure in its dominance of the UAE market and this is evidenced by the rise in the telco’s subscriber numbers and profitability in the years that Du has been operational.

Ben Verwaayen’s first significant move as CEO of telecoms vendor Alcatel-Lucent, is to slash 1,000 management positions and 5,000 contractor jobs, as part of a drastic cost-reduction strategy and realignment of the company’s operations.

CEO Ben Verwaayen’s turnaround strategy for Alcatel-Lucent includes eliminating 6,000 jobs and focusing research on optical, IP, broadband and applications enablement, in an effort to save €750 million in 2009

On December 12, Verwaayen announced the restructuring initiatives that are hoped will achieve total savings of €750 million (US$1 billion) on a run rate basis by the fourth quarter of 2009. One third of savings is expected to come from the cost of goods sold, and two-thirds to come from R&D and SG&A (selling, general and administrative) expenses.

Research and development will be focused on four key segments – optical, IP, broadband, and applications enablement, while the company will focus on three markets – service providers, enterprises and selected verticals.

However, industry commentators are not convinced this strategy will be enough to turnaround the company, which experienced its seventh successive quarterly loss in Q308 with a net deficit of €38 million (US$50.9 million), and which has lost 70 per cent of its share value in 2008.

While analysts have speculated that the Paris-headquartered company would spin-off its ever-diminishing CDMA business, the CEO confirmed earlier this month that the vendor would retain its mobile business.

“It is not true we are going out of mobile. It is not true that we are a beleaguered company,” Verwaayen stated.

Alcatel-Lucent also plans to combine the “trusted capabilities of the network environment with the creative communications services of the web” to gain more value out of the Web 2.0 and Web 3.0 ecosystem.

It will also partner, co-source and consolidate, in an effort to reduce spending on WiMAX, consumer premises equipment, non-IMS based fixed NGN portfolios and some legacy applications.

Econet Wireless Kenya launched operations as the country’s fourth mobile operator at the beginning of December, marking the end of long and twisting journey for the South Africa-based telecoms operator, which was initially issued the licence in 2004.

It had been suggested that Econet in its own right could not finance the rollout of the network, and was rescued earlier this year by Indian mobile telecoms company Essar Communication, a subsidiary of Essar Global, which acquired a 49 per cent stake in the Kenyan licensee.

Essar acquired the stake from Econet Wireless International, which held a 70 per cent controlling stake in the licensee, and had been reported to be scouting for a suitable financier since the Communications Commission of Kenya confirmed the award of the licence in September 2007.

When Essar acquired its stake in Econet Wireless Kenya, it was reported that the Indian operator would invest as much as US$500 million on the rollout of the GSM network.

The Kenyan operation is branded ‘Yu’, and represents the first expansion outside of India for Essar in the communications sector.

“We thought the Kenyan opportunity was a good one as it combines low penetration with high prices, and high margins,” commented Michael Foley, CEO for East Africa of Essar Communications. “There are incumbent business models in place at the moment and there is an opportunity to reap benefits from improved technology. It is as simple as who has the gold, rules.”

Yu launched with a rate of KES 7.50 (US$0.10) per minute to all other mobile networks, and is offering an additional incentive of paying all Yu subscribers KES 0.75 per minute for receiving calls from the other Kenyan mobile networks. The accumulated bonus airtime will be credited the following month for usage.

Yu has worked with Ericsson as its primary infrastructure provider, with Foley believing that low cost infrastructure is not always the best option for greenfield players in emerging markets such as Africa. He said it took Yu five months to roll out the network in preparation for launch, and that much of the nascent operator’s strategy will be based on automation, a focus on processes, and outsourcing.

The three incumbent operators in Kenya are Safaricom, Zain and Telkom Kenya (Orange Kenya).

Struggling Canadian telecommunications vendor, Nortel, has sought legal advice for a possible filing of bankruptcy, according to reports.

  Nortel shares fell yesterday to a mere US$0.40 each, down from US$99 in 2000. The Toronto-based company’s market value stands at only US$190 million.

Analysts say bankruptcy is a likely possibility taking into account the company’s continuing losses, increasing debt load and the lack of interest in the sale of its Metro Ethernet Networks unit, which includes its optical and carrier ethernet technology.

“Considering the worsening macro environment, Nortel’s challenged industry position, and concerns related to liquidity while the capital markets are basically closed, we think bankruptcy is a distinct possibility down the road,” RBC Capital Markets analyst Mark Sue commented.

“Asset sales couldn’t have come at a worse time, and due to Nortel’s distressed situation, potential bidders for the company’s Metro Ethernet assets may offer subsequently distressed prices,” Sue added.

In the quarter ending September 30, the vendor endured its largest quarterly loss in seven years amounting to US$3.413 billion, from a loss of US$113 million in the previous quarter and a profit of US$27 million a year ago. It also announced redundancies of 1,300 positions, equating to five per cent of its global workforce.

A spokesperson from Nortel said the company has no immediate plans to file for bankruptcy, but has sought legal advice to “chart a way forward”.

Shares nosedived by 23 per cent to US$0.40 per share yesterday, valuing the multinational company of 30,000 staff at only US$190 million. Eight years ago, shares were worth as much as C$124 (US$99).

VIVA, STC’s mobile subsidiary in Kuwait, commenced commercial operations on December 3, with subscribers enjoying free local calls for their first three months. Competitive pricing plans are also in place.

VIVA is the brand name of the Kuwait Telecom Company, Kuwait’s third mobile operator, and will compete with incumbent operators Zain and Wataniya.

Following the free call period for VIVA subscribers, post-paid subscribers will be able to take advantage of local calls at no cost if their call duration exceeds five minutes, while receiving international and landline calls will also be free of charge.

Saudi Arabia’s STC owns 26 per cent of the Kuwait operator, and calls made to STC numbers in Saudi Arabia will be charged at a local rate. Meanwhile subscribers of the prepaid ‘Value Service’ will have access to free on-network local calls for an unlimited period of time, and their choice of mobile phone number.

The Kuwaiti government holds 24 per cent of the Kuwait Telecom Company, with the remaining 50 per cent sold to citizens in an initial public offering held in August. The capital of the company is KWD50 million (US$182 million).

Competitors Zain Kuwait and Wataniya have a combined 2.5 million customers in a population of 3.4 million people, representing a mobile penetration rate of 73.5 per cent.