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Kuwait Telecommunications Report Q1 2011
Business Monitor International, Jan 2011, Pages: 82
Kuwait Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Kuwait's telecommunications industry.
BMI’s Q111 update on Kuwait’s telecommunications market contains latest operational data from market leader Zain and second-ranked Wataniya, which has led to a slight revision in forecasts for the mobilemarket. However, latest data on the fixed-line, internet and broadband markets by the Ministry ofCommunications (MoC) remains for 2009, leading to the retention of current growth expectations. Wehave, meanwhile, extended our forecast to 2015 for all markets.
Zain experienced its first net loss for 2010 in the quarter ended September. The operator revealed a loss of 16,000 subscribers from its customer base to end the third quarter on a total of 1.871mn. This had theimpact of reducing its market share to 41.1%, although it has been losing market share for some time withthe introduction of greater competition. In Q309, it had a market share of 48.2%. Part of the reason for itsnet loss could be due to the operator’s customers falling out with the 90-day active definition that Zainuses. By contrast, Wataniya made a net gain of 49,000 in the quarter to 1.719mn subscribers and a marketshare of 37.8%, while we estimate that Viva had 959,000 subscribers, equivalent to a market share21.1%.
Despite Zain’s lacklustre performance, the operator could benefit significantly in terms of receiving investment funds to expand and upgrade its existing infrastructure. The Financial Times announced inNovember 2010, that the UAE’s Etisalat had agreed to acquire a controlling 46% stake in Zain from theKharafi merchant family and other minor shareholders at roughly US$6.1 per share in cash.Greater losses in the fixed-line sector are expected during 2010 after it was revealed that the MoC hadthreatened to disconnect users for failing to pay their overdue bills. Subscribers pay for connection andline rental, but otherwise services remain virtually free. The disconnection of fixed lines has previouslyoccurred in Kuwait, mostly during 2009 and once again as a result of customers failing to pay their bills.
The MoC which currently acts as regulator and sole provider of fixed line voice services in the country has announced plans to privatise the fixed line sector over the next two years as it seeks to help Kuwaitachieve its goal of becoming an economic and financial hub. The privatisation of Kuwait PublicTelephone (KPT) and the possible introduction of new competition could breathe greater life into thefixed-line market, which is currently suffering from a decline.
Similarly, greater competition is required in the internet and broadband sectors. However, the government revealed in November 2010 that it had suspended the issuance of licences for new internet serviceproviders (ISPs) until a separate telecoms regulator from the MoC could be established in the country.Currently, as we have stated, the interests of the MoC are in conflict as it is the sole provider of fixed lineservices. An independent regulatory body could be charged with granting licences and setting the relevantstandards and conditions required to encourage greater competition.
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