This Middle East market report covers the mobile telephony and mobile data markets in each of the following countries: Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, Turkey, United Arab Emirates and Yemen
The Middle East mobile market is characterised by some very high penetration rates and continuing healthy subscriber growth rates in most countries. This is putting strain on ARPU rates, which are falling as subscriber numbers increase.
The six countries of the Gulf Cooperation Council (GCC) all have penetration rates well in excess of 100%, with the UAE, Bahrain and Qatar nearer 200%. This is due to intense competition and to multi-SIM ownership as subscribers aim to maximise special offers and different deals. The large and transient expatriate populations in the Gulf countries are also a factor in encouraging competition, and thus growth and penetration rates - with a fluid population new operators stand a better chance of gaining market share. Inevitably there must also be a significant number of inactive prepaid SIM-cards.
Growth rates are also high in the less developed markets of Iraq, Iran and Lebanon. Amongst the lower growth countries, Turkey was hit hard by the Global Financial Crisis, leading to a recession and a fall in mobile penetration. Israel has also seen low growth rates, partly due to much a much lesser economic slowdown and partly to saturated markets and perhaps distraction due to considerable industry structural changes.
The region is home to some very large international players. Etisalat of the UAE and Zain of Kuwait have been particularly aggressive buyers of both new licences and existing operators in Africa, the Middle East and Asia. Qtel of Qatar, STC of Saudi Arabia and Batelco of Bahrain have also taken this route for growth.
In the more developed Gulf countries and Israel, operators are pinning their growth hopes on persuading their mobile subscribers to take up data and broadband services. Customers want the latest in high-end handsets and have the income to pay for them. 3G services in these countries are well established, together with HSPA. Outside the Gulf countries, Israel and Turkey, no operator has launched 3G or HSPA although Jordan issued a licence to Orange in August 2009.
The Iranian market grew very strongly during 2008 and 2009 due to the continued affects of the competition from second operator MTN Irancell and the introduction of prepaid services. A question hangs over the market however after a troubled tender for a third licence in 2009, echoing the problems of the second mobile licence tender. The licence was first awarded to a consortium led by Etisalat of the UAE, with local company Tamin Telecom as its partner, and then withdrawn. It was then awarded to a consortium led by Zain of Kuwait but then again withdrawn. After various other rumours, the saga appeared to conclude in October 2009 with the news that Tamin Telecom had won back the licence in its own right and was looking for an experienced international telecommunications consultancy partner. Tamin plans to launch the third mobile operator by end-2010. In a further development, incumbent telco TCI, together with its mobile division, was privatised in late September 2009 with sale of a 50% plus one share stake to a consortium of three privately owned companies reported as being affiliated to the Iranian Revolutionary Guard.
The Israeli market has been stable for some time but the Israeli government is moving to create a wholesale market in all sectors of communications. Considerable merger and acquisition activity is taking place as the major fixed-line, mobile, Internet and pay TV players all aim to consolidate or improve positions across all sectors. 3G subscribers make up at least a third of the total and revenue from mobile data has grown steadily.
Kuwait has been the odd one out amongst the small, rich GCC countries, with mobile penetration rates on a par with those of very much poorer Jordan. Unlike in similar countries in the region, multiple SIM usage was not common. Major operators Zain and Wataniya enjoyed a very comfortable duopoly. All this is changing since the launch of the third operator and penetration rates are rising rapidly. The increased competition is causing ARPU rates to fall rapidly but from very high levels - Zain’s Kuwaiti ARPU is twice that of its subsidiary in Bahrain.
The mobile market in Lebanon has been transformed by the regulatory reforms of April 2009, reducing tariffs and improving products. Lebanon has two government-owned networks operated by private companies in return for a management fee, with all revenue going to the government. The government controls all tariffs. This led to a stagnant market and subscriber levels below those of much-poorer Syria but the lifting of constraints has had a startling affect with annual growth levels of over 60%. The privatisation of the networks has been imminent for many years.
Competition finally came to the Qatari mobile market in July 2009 with the launch of services by Vodafone. Vodafone has had mixed success in the Middle East to date, with poor results in Turkey but faring much better in Egypt. Qtel has responded competitively, claiming growth rates over 40%. As Vodafone also acquired a market share well over 10% in its first six months, growth rates in the already highly penetrated market have been astonishing.
Saudi Arabia is the only market where the region’s three largest operators - Etisalat of the UAE, Zain of Kuwait and STC on its home turf - go head to head. In addition, Qtel, also an aspirant to join the international big league of players, owns a smaller iDEN operator. Competition in the market is very fierce and growth high.
Mobile subscribers, annual change and penetration rates in the Middle East - June 2009
Country | Mobile subscribers (million) | Annual change | Mobile penetration |
Bahrain | 1.4 | 12% | 177% |
Iran | 56.2 | 39% | 76% |
Iraq | 20.1 | 37% | 65% |
Israel | 9.2 | 3% | 128% |
Jordan | 5.6 | 12% | 88% |
Kuwait | 3.7 | 25% | 107% |
Lebanon | 2 | 57% | 52% |
Oman | 3.5 | 18% | 126% |
Qatar | 1.9 | 32% | 165% |
Saudi Arabia | 32.8 | 30% | 130% |
Syria | 7.5 | 9% | 37% |
Turkey | 63.7 | 0% | 91% |
UAE | 10.2 | 17% | 210% |
Yemen | 7.3 | 31% | 31% |
(Source: BuddeComm based on Global Mobile data) Data in this report is the latest available at the time of preparation and may not be for the current year.