Saudi Arabia Telecommunications Report Q3 2012
Business Monitor International, July 2012, Pages: 78
The Saudi Arabia Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Saudi Arabia's telecommunications industry.
Saudi Arabia's three mobile operators reported strong financial results in Q112, benefiting from increased usage of high-value services. Incumbent STC recorded a 12% and 60% y-o-y growth in consolidated revenue and net income respectively, while Etihad Etisalat (Mobily) recorded 12% and 21% y-o-y growth in revenues and profits for its Saudi operations. Although third-ranked Zain KSA is still in the red in terms of profits, the operator cut its losses by 18% in Q112 compared to Q111 after a 3% y-o-y revenue growth in the same period.
Saudi Arabia is among countries that have seen a huge increase in public sector wages and government spending. We believe the key area of impact in the telecoms sector is rising consumer demand for premium products and services, a situation the country's network operators are well placed to take advantage of with the roll-out of next generation networks, including FTTx and 4G LTE. We expect strong private consumption, along with the seasonal surge in subscriptions and usage during the Islamic festivals, to sustain operators' revenue growth in 2012. BMI notes that the country’s three leading mobile operators have announced significant LTE network expansion plans since our last update.
According to the Communications and Information Technology Commission (CITC), the mobile market grew by 1.1% q-o-q in Q112 to 54.3mn subscribers by the end of March 2012. This partly reversed a contraction of 4.3% q-o-q during Q411. By the end of 2016, we forecast penetration in Saudi Arabia to reach 203%, unchanged from our previous update. This will equate to a predicted 63.2mn mobile subscribers. Growth in the country’s mobile market will mainly be sustained by the influx of seasonal visitors for religious and business purposes, such as pilgrims to the annual Hajj. We expect STC’s investment in next generation fixed network infrastructure to be a key growth driver for fixed-line connections. Despite growth in fixed-line subscriptions, we expect fixed-line penetration to remain flat in the short term and then decline in the latter stages of our forecast period. By the end of 2016, we forecast a fixed-line subscriber base of 5.104mn, a penetration rate of 16.4%.
The latest data from the CITC suggest there were around 14.2mn internet users in Saudi Arabia at the end of March 2012, up from 13.9mn in 2011. These figures include subscriptions to dial-up technologies, as well as mobile broadband subscriptions through smartphones. According to the CITC, there were around 9.01mn broadband subscriptions in Saudi Arabia at the end of December 2011, a penetration of 32.1%. By March 2012, the number of broadband subscriptions reached 9.71mn, reflecting growth of 7.8% during the first three months of 2012. We expect growth in the internet sector to remain strong in 2012, driven by considerable investment into broadband infrastructure. We forecast internet and broadband penetration rates to reach 68.1% and 49% respectively at the end of December 2016.
Executive Summary 5
SWOT Analysis 6
Saudi Arabia Mobile SWOT 6
Saudi Arabia Wireline SWOT 7
Saudi Arabia Political SWOT 8
Saudi Arabia Economic SWOT 9
Saudi Arabia Business Environment SWOT 9
Risk/Reward Ratings 10
Middle East And North Africa 10
Table: MENA Telecoms Risk Reward Rankings, Q312 13
Saudi Arabia 14
Industry Forecast Scenario 15
Mobile 15
Table: Telecoms Sector – Mobile – Historical Data & Forecasts, 2009-2016 15
ARPU 17
Table: Monthly ARPU 17
Fixed Line 18
Table: Telecoms Sector – Fixed Line – Historical Data & Forecasts 18
Internet 19
Table: Telecoms Sector – Internet – Historical Data & Forecasts 19
Market Data Analysis 21
Mobile 21
Table: Saudi Arabia Mobile Market, Q112 22
ARPU 23
MVNO 23
3G 24
4G 25
Mobile Contract Wins 27
Table: Mobile Contract Wins 27
Mobile Content 28
Regional Outlook 28
Value-Added Services Timeline 32
Table: Selected VAS Services 32
Mobile Operator Data 33
Table: Saudi Arabia Mobile Market Overview 33
Table: STC 33
Table: Mobily 34
Table: Bravo 34
Table: Zain 35
Fixed Line 36
Competition 37
Internet 39
Broadband 39
WiMAX 41
Optical-Fibre 42
FTTH 43
IPTV 44
Wireline Contract Wins 45
Table: Wireline Contract Wins 45
Regulatory Environment & Industry Developments 46
Saudi Arabia: Regulatory Bodies And Their Responsibilities 46
Legislation 47
Privatisation Of STC 48
Competition And Market Liberalisation 48
Licensing 50
Spectrum 51
Regulatory Developments 51
Industry Developments 51
Competitive Landscape 52
Key Players 52
Table: Key Players: Saudi Telecoms Sector 52
Table: Saudi Arabia Financial Indicators 52
Company Monitor 53
Table: Cisco Financial Performance By Theatre (US$mn), H1 FY12 56
Company Profiles 57
Saudi Telecommunications Company (STC) 57
Etihad Etisalat (Mobily) 60
Regional Telecommunications Penetration Overview 64
Fixed Line 64
Table: Regional Fixed-Line Penetration Overview 64
Mobile 65
Table: Regional Mobile Penetration Overview 66
Broadband 66
Table: Regional Broadband Penetration Overview 67
Demographic Outlook 68
Table: Saudi Arabia's Population By Age Group, 1990-2020 ('000) 69
Table: Saudi Arabia's Population By Age Group, 1990-2020 (% of total) 70
Table: Saudi Arabia's Key Population Ratios, 1990-2020 71
Table: Saudi Arabia's Rural And Urban Population, 1990-2020 71
Glossary Of Terms 72
Table: Glossary Of Terms 72
BMI Methodology 73
How We Generate Our Industry Forecasts 73
Table: Key Indicators For Telecommunications Industry Forecasts 73
Telecoms Business Environment Ratings 75
Risk/Reward Ratings Methodology 75
Table: Ratings Indicators 76
Weighting 77
Table: Weighting Of Indicators 77
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