Kuwait Telecommunications Report Q3 2012

BMI’s Q312 update on Kuwait’s telecommunications market contains the latest sector news and developments, as well as analysis of financial and operational indicators published by the country’s major service providers, including mobile operators Zain, Wataniya and VIVA. At the time of writing, the latest data from Zain and Wataniya relate to the end of March 2012 while the latest data published by VIVA relate to end of December 2011. This report also contains updates to BMI’s five-year forecasts, through to 2016, for the mobile, fixed-line and internet sectors based on historical market data as well as macroeconomic and industry specific developments in the country.

BMI’s revised YE11 data based on operator subscriber figures showing there were 4.962mn mobile subscribers in Kuwait at the end of December 2011. This means the market grew by 11.5% during 2011 to bring the mobile penetration rate to 176.1% at the end of 2011, up from 162.6% a year earlier. Based on data published by Zain and Wataniya, and estimates for third-ranked VIVA, we believe the market grew by 1.8% during Q112 to reach 5.051mn subscribers. We expect Kuwait’s mobile market to remain on a positive growth trajectory during our forecast period, driven by population growth and constant stream of tourist, expatriates and other visitors. By 2016, we forecast the number of mobile subscribers in Kuwait to reach 6mn. This would be equivalent to a penetration rate of around 193%. BMI cautions that the discounting of inactive lines and a reduction in the incidence of multiple ownership are the biggest threats to our growth outlook for Kuwaiti mobile market.

Following the roll out an LTE network by VIVA, Kuwait’s two biggest networks Zain and Wataniya have embarked on significant upgrades to their mobile data networks, including projects to prepare them for LTE upgrades. This development bodes for the operators’ ARPU, which has come under increasing downward pressure from competition, especially in the voice segment. We also expect it to drive growth in the broadband segment, which has long been held back by a lack of competition and limited investment in fixed network infrastructure. Meanwhile, we have revised our broadband historical data and forecasts to reflect the strong take-up of wireless broadband services. We now estimate there were around 410,000 broadband connections in Kuwait at the end of December 2011, a penetration rate of 14.5%. We expect this to rise to almost 1mn connections and penetration of more than 31% by 2016. BMI’s broadband data include fixed network connections and wireless access connections via USB modems and dedicated data cards.

Some of the major developments in the market since our last report include plans by the Ministry of Communications (MoC) to issue new operating licences to internet service providers (ISPs), the launch of IPTV services by ISP FASTtelco, and the deployment of new value-added services by the mobile operators. VIVA has launched an HSPA+ mobile data network capable of providing speeds of up to 42.2Mbps. The operator, which has made data a key part of strategy, reported a 47% year-on-year (y-o-y) increase in revenue in 2011 to KWD94mn.