BlackBerry Nears VoIP Deal in UAE - Analyst Blog

By Zacks | February 15, 2013 AAA

As per media reports Blackberry Limited (BBRY) is on the verge of signing an agreement with the telecom carriers in United Arab Emirates (UAE), that will allow the handset manufacturer to offer VoIP (Voice over Internet Protocol) services for the first time in the gulf country. If successful the deal could come as welcome news for BlackBerry in the UAE, which is one of the six countries where the company recently launched it's BB10 OS (operating System) based device. Blackberry has faced resistance in the Middle Eastern countries to launch its VoIP services because the telecom carriers receive high roaming tariffs from the voice calls made by the countries' emigrant populations. The Dubai-based carrier DU and BlackBerry are currently testing VoIP and Internet-based video services and expect to launch it in the near future.

Voice calls are generally charged based on the length of the call and the country receiving the call. However, VoIP calls are offered almost for free once customers have purchased a data plan from a telecom carrier. VoIP is a serious threat to traditional voice calls and according to research firm Ovum the Internet-based service will hurt the telecom industry with $479 billion in lost revenues by 2020.    

BlackBerry, which is popular for its BBM (blackberry Messenger) service has almost 60 million active members and provides free and secure instant messaging service. The company has added a video function to its BB10 OS-based device in addition to the already present voice functions.

If the Canadian handset manufacturer receives the nod to launch the services in the oil rich country, then it will gain an edge over its rival Samsung Electronics, Apple Inc. (AAPL) and Nokia Corporation (NOK). Nokia, which offers Microsoft Corporation's (MSFT) VoIP service Skype Apple's very own Face Time are blocked in the UAE by the service providers.

Allowing the VoIP service could put the UAE carriers into a disadvantageous position that are already loosing money as customers are looking for other options to overcome high cost voice calls. Therefore, if BBM voice and video services are allowed then the carriers need to come up with an alternative measures to compensate their loss of revenue from international calls.

Historically, UAE has been a popular market for the Waterloo, Canada-based company and retailers in UAE have seen robust demand for its latest BB10-based Z10 smartphones. We believe if BlackBerry indeed receives success in proving VoIP services then it will boost the sales of its latest device, while paving the way for future success in the country.

Currently, BlackBerry carries a Zacks Rank #3 (Hold).

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