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Saudi Arabia - Telecoms, Mobile & Broadband
Paul Budde Communication Pty Ltd., April 2010, Pages: 36
Executive summary
BuddeComm’s Annual Publication, Saudi Arabia - Telecoms, Mobile and Broadband, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in Saudi Arabia.
The Saudi Arabian telecoms market is perhaps the most interesting in the Middle East. It is more competitive than most others and all the big regional players have at least a toehold in the market. Saudi Arabian incumbent STC is the largest telecoms company in the Middle East when measured by either revenue or by market capitalisation. It has been joined in the Saudi Arabian mobile market by the second and third largest Middle Eastern regional players - Etisalat of the UAE and Zain of Kuwait.
Etisalat has considerably more than a toehold in the market. It won the second GSM/3G mobile licence and, operating as Mobily, now has over one third of the GSM market and three quarters of the 3G market. It has also bought Bayanat Al Oula, a major ISP/data comms licence holder, and has invested in considerable fibre and Wi-MAX infrastructure.
Zain won the third GSM/3G licence in 2007 and launched operations in August 2008. It paid a huge US$6.1 billion fee, almost twice the price paid by Etisalat for the second mobile licence (US$3.45 billion) in 2004. At the time it was the world’s highest licence fee on a per capita basis, at US$226 per Saudi inhabitant.
These three giants have been joined in the market by Batelco of Bahrain and Qtel of Qatar. Batelco is a major investor in a consortium, Etihad Atheeb, which has won a fixed-line licence. Finally, the remaining large regional player, Qtel, has a major share in the small iDEN mobile operator, PTC, through its Wataniya subsidiary.
What makes Saudi Arabia so attractive to all these operators the combination of its population size and wealth. While its total population is nowhere near as high as that of Turkey or Iran, its GDP per capita is much higher and while the smaller gulf countries are richer per capita, their populations are tiny. In addition its market has been slower to develop than some others in the region such as the UAE or Qatar, leaving room for growth.
Fixed-line penetration has remained steady for some years rather than falling as it has in some other countries in the region. Internet user penetration is nearly 40% but DSL broadband subscriber penetration is only around 5%. However, the number of DSL subscribers doubled in the two years to end-2009. STC also started work on a FttH network in early 2009.
Mobily/Bayanat Al Oula and Atheeb Telecom are planning to make extensive use of WiMAX. Bayanat intends to have coverage of 20 cities by end-2009 with 1,800 base stations. It launched a WiMAX service for residential subscribers branded ‘broadband@home’ in September 2008 at speeds up to 2Mb/s. Coverage was initially available in Riyadh, Jeddah, Dammam and Khobar. Subscribers can be prepaid. In June 2009 Bayanat claimed to have 30,000 subscribers.
Mobile subscribers have grown rapidly in the competitive market and penetration rates have now reached 175%. 3G subscribers now make up around 15% of the total.
Mobily is making an extensive push with mobile broadband, much more so than in Etisalat’s home market of the UAE where it has a monopoly of the fixed-line market and thus mobile broadband growth might detract from its ADSL market. In Saudi Arabia, Mobily claimed to have over one million mobile broadband subscribers in early 2010. Mobile broadband and WiMAX broadband subscribers exceed the number of ADSL subscribers.
As competition becomes fierce in its home market, STC has used its considerable resources to expand abroad. It has direct interests in Malaysia, Kuwait and Bahrain and through its purchase of a 35% share in Oger Telecom, also in Turkey and South Africa.
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