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Middle Eastern Regulatory, Infrastructure and Fixed-line Market

This Middle East market report gives an overview of the fixed-line voice and infrastructure segment of the telecoms markets of the region. It details the major operators and infrastructure in each of the following countries: Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, Turkey, UAE and Yemen. Researcher:- Tine LewisCurrent publication date:- August 2010 (9th Edition)Next publication date:- August 2011


Competition is driving telecoms growth in the Middle EastIn the Middle Eastern region telecommunications infrastructure varies from very advanced to very rudimentary. Fibre to the Home projects are well advanced in Israel and the Gulf countries but in Yemen and Iraq fixed-line penetration is only around 5%. The area is well served with international links via submarine cables with more under construction.

At first glance fixed-line teledensity in the Arab Middle East would appear very low, even in the wealthier countries, compared with teledensity rates of around 60% in the USA for example. However, figures can be misleading due to the larger household sizes compared with Europe or the USA, plus large hostel-accommodated expatriate populations in some countries. In fact in many countries household penetration is at or near 100%. Several markets are showing decline due to mobile substitution, particularly dramatically in Jordan with its very competitive mobile market.

The fixed-line sector has been the last to be opened to competition and in all markets the incumbent remains the major player in the fixed-line voice market but change is underway, mostly through VoIP and calling-card operators and later WiMAX operators, but in the case of the UAE, also through sharing infrastructure.

All fixed-line incumbents also offer mobile services and in many countries operators who began in the mobile sector are also moving into the fixed-line sector.

Market HighlightsBahrain

All sectors of the Bahraini communications market have been liberalised. Incumbent Batelco shares the fixed-line market with around fifteen other operators providing international calling services using international direct dial, carrier pre-selection or prepaid calling cards. Around 50% of international call minutes originating from fixed lines use prepaid calling cards. Like other GCC countries, Bahrain has a large expat population (approximately 50% of the total) and this has been the cause of the impact of prepaid VoIP-based calling cards on the market and on Batelco’s international call revenues. Infrastructure is excellent - Batelco completed the rollout of an NGN in January 2009.

Israel

Whilst incumbent Bezeq still has a big majority of the domestic fixed-line market, its share has fallen rapidly since the introduction of number portability in December 2007 and going into 2010 was down to around 75% of the consumer segment by revenue and 85% of the business sector. VoIP operators and cable company HOT are the beneficiaries.

The international fixed-line market has been very competitive for many years. Three operators dominate the market with roughly equal shares. All are keen to move into providing domestic call services and the three already share the majority of the ISP market. This market is particularly interesting as these players, together with the three mobile operators who are also moving into the fixed-line voice and Internet market, jostle for position.

Significant investment is being made in NGN infrastructure. Bezeq commercially launched an NGN in September 2009. It had 374,000 subscribers connected to the network at end-2009 and 580,000 by early May 2010 (around 25% of Israeli households). Bezeq plans to make the NGN available to approximately 50% of Israeli households by end-2010 and 90% of households by end-2012. The network is ‘fibre to the curb’ and allows for an up to 50MB bandwidth offering.

United Arab Emirates

In July 2010 incumbent Etisalat and alternative operator du completed negotiations to open their networks, allowing each to use the other’s networks and compete across all fixed-line infrastructure in all parts of the country. A testing phase began, with a commercial launch of services expected in late 2010.

Etisalat has a very substantial FttH project, which is being completed in phases. The first batch of Abu Dhabi subscribers received last mile FttH access in January 2008. By end-2009 Etisalat claimed to have completed 60% of the network. It expected to make Abu Dhabi “the first capital city in the world with 100% fibre deployment” by 2010 and at end-2009 had completed the roll-out for 85% of Abu Dhabi households. Completion of the entire national network is expected by 2011 at a total cost of AED5 billion.

Top five Middle East countries - estimated fixed-line teledensity - 2010

  Country | GDP per capita | Population | Number of Households | Fixed lines | Teledensity |
(US$) | (millions) |
Israel | 26,843 | 7.4 | 2.4 | 3 | 40% |
Iran | 4,777 | 75 | 13 | 26 | 34% |
UAE | 49,995 | 5 | 0.8 | 1.6 | 31% |
Bahrain | 21,097 | 1.1 | 0.2 | 0.25 | 23% |
Turkey | 9,950 | 71 | 16 | 16 | 22% |
(Source: BuddeComm based on IMF and industry data)
Data in this report is the latest available at the time of preparation and may not be for the current year.

1. Bahrain
1.1 Overview of Bahrain’s telecom market
1.2 Regulatory environment
1.2.1 Background
1.2.2 Regulatory authority
1.2.3 Telecom sector liberalisation in Bahrain
1.2.4 Interconnect
1.2.5 Access
1.2.6 Number portability
1.2.7 Privatisation
1.3 Fixed network operators in Bahrain
1.3.1 Overview
1.3.2 Bahrain telecommunications company (Batelco)
1.3.3 Alternative operators
1.4 Telecommunications infrastructure
1.4.1 National telecom network
1.4.2 International infrastructure
1.5 Wholesaling
1.5.1 Overview
1.5.2 Unbundled services (LLU)
2. Iran
2.1 Overview of Iran’s telecom market
2.2 Regulatory environment
2.2.1 Background
2.2.2 Privatisation of TCI
2.2.3 WiMAX licences
2.2.4 Regulatory authority
2.3 Fixed network operators in Iran
2.3.1 Telecommunication Company of Iran (TCI)
2.3.2 Telecommunications Infrastructure Company (TIC)
2.3.3 Other licence holders/Zoha Kish
2.4 Telecommunications infrastructure
2.4.1 National telecom network
2.4.2 International infrastructure
3. Iraq
3.1 Overview of Iraq’s telecom market
3.2 Regulatory environment
3.2.1 Background
3.2.2 Regulatory authority
3.2.3 Telecom sector liberalisation in Iraq
3.3 Fixed network operators in Iraq
3.3.1 Iraqi Telephone and Postal Company (ITPC)
3.3.2 Wireless Local Loop operators
3.4 Telecommunications infrastructure
3.4.1 National telephone network
3.4.2 International infrastructure
4. Israel
4.1 Overview of Israel’s telecom market
4.2 Market analysis - 2010
4.3 Regulatory Environment
4.3.1 Regulatory authority
4.3.2 Privatisation of Bezeq
4.3.3 Telecom sector liberalisation in Israel
4.3.4 The situation in 2010 - a new telecom market
4.3.5 Number Portability (NP)
4.3.6 Universal Service Obligation (USO)
4.4 Wholesaling
4.4.1 Overview
4.4.2 Naked DSL
4.5 Major Fixed Network Operators
4.5.1 Overview of operators
4.5.2 Bezeq
4.5.3 Bezeq International
4.5.4 HOT Telecommunication Systems
4.5.5 013 NetVision
4.5.6 012 Smile Telecom
4.5.7 Xfone 018/Marathon Telecommunications
4.6 Telecommunications Infrastructure
4.6.1 National telecom network
4.6.2 International infrastructure
4.6.3 Infrastructure developments
5. Jordan
5.1 Overview of Jordan’s telecom market
5.2 Regulatory environment
5.2.1 Background
5.2.2 Regulatory authority
5.2.3 Telecom sector liberalisation in Jordan
5.2.4 Privatisation
5.2.5 Interconnect
5.2.6 Carrier preselection
5.2.7 Local Loop Unbundling (LLU)
5.3 Fixed-network operators in Jordan
5.3.1 Jordan Telecom Group/JTG/Orange Jordan
5.4 Telecommunications infrastructure
5.4.1 National telecom network
5.4.2 International infrastructure
5.5 Wholesaling
5.5.1 Access
5.5.2 JTG’s pricing structure
5.5.3 Friction between JTG and other ISPs
6. Kuwait
6.1 Overview of Kuwait’s telecom market
6.2 Regulatory environment
6.2.1 Background
6.2.2 Regulatory authority
6.2.3 Privatisation of Mobile Telecommunications Co
6.3 Telecom operators in Kuwait
6.3.1 Ministry of Communications
6.3.2 Hits Telecom
6.4 Telecommunications infrastructure
6.4.1 National telecom network
6.4.2 International infrastructure
7. Lebanon
7.1 Overview of Lebanon’s telecom market
7.1.1 InvestCom
7.1.2 Saudi Oger/Oger Telecom
7.2 Regulatory environment
7.2.1 Background
7.2.2 Regulatory authority
7.2.3 Telecom sector liberalisation in Lebanon
7.2.4 Privatisation
7.2.5 Interconnect
7.3 Fixed network operator in Lebanon
7.3.1 Ogero Telecom
7.4 Telecommunications infrastructure
7.4.1 National telecom network
7.4.2 International infrastructure
8. Oman
8.1 Overview of Oman’s telecom market
8.2 Regulatory environment
8.2.1 Background
8.2.2 Regulatory authority
8.2.3 Telecom sector liberalisation in Oman
8.2.4 Privatisation
8.2.5 Interconnect
8.2.6 Number Portability (NP)
8.2.7 VoIP
8.3 Fixed network operator in Oman
8.3.1 Oman Telecommunications Company (Omantel)
8.3.2 -Nawras Telecom (Omani-Qatari Telecommunications Company)
8.4 Fixed-line services
8.4.1 Prepaid and postpaid fixed-line services
8.5 Telecommunications infrastructure
8.5.1 National telecom network
8.5.2 International infrastructure
9. Qatar
9.1 Overview of Qatar’s telecom market
9.2 Regulatory environment
9.2.1 Background
9.2.2 Telecommunications Law 2006
9.2.3 Telecommunications Executive By-Law 2009
9.2.4 Tariff regulation
9.2.5 Regulatory authority
9.2.6 Telecom sector liberalisation in Qatar
9.2.7 Privatisation
9.2.8 Number portability
9.3 Fixed network operator in Qatar
9.3.1 Qatar Telecom (Qtel)
9.4 Telecommunications infrastructure
9.4.1 National telecom network
9.4.2 International infrastructure
10. Saudi Arabia
10.1 Overview of Saudi Arabia’s telecom market
10.2 Regulatory environment
10.2.1 Background
10.2.2 Regulatory authority
10.2.3 Telecom sector liberalisation in Saudi Arabia
10.2.4 Privatisation
10.2.5 Interconnect and access
10.2.6 Number Portability (NP)
10.2.7 Universal service
10.3 Fixed network operators in Saudi Arabia
10.3.1 Saudi Telecom Company (STC)
10.3.2 ITC
10.3.3 Bayanat Al-Oula/Mobily
10.3.4 Etihad Atheeb Telecommunications Company (GO)
10.4 Telecommunications infrastructure
10.4.1 National telecom network
10.4.2 International infrastructure
11. Syria
11.1 Overview of Syria’s telecom market
11.2 Regulatory environment
11.2.1 Background
11.2.2 Regulatory authority
11.2.3 Telecom sector liberalisation in Syria
11.2.4 Interconnect
11.3 Fixed network operator in Syria
11.3.1 Syrian Telecommunication Establishment (STE)
11.4 Telecommunications infrastructure
11.4.1 National telecom network
11.4.2 International infrastructure
12. Turkey
12.1 Overview of Turkey’s telecom market
12.2 Regulatory Environment
12.2.1 Background
12.2.2 Regulatory authority
12.2.3 Telecom sector liberalisation in Turkey
12.2.4 Privatisation
12.2.5 Interconnect
12.2.6 Access
12.2.7 Number portability
12.2.8 Universal services
12.2.9 Electronic Signature Act
12.3 Fixed Network Operators
12.3.1 Overview
12.3.2 Turk Telekom
12.3.3 Turksat
12.3.4 Superonline
12.3.5 Borusan Telekom
12.4 Telecommunications Infrastructure
12.4.1 National telecom network
12.4.2 International infrastructure
13. United Arab Emirates
13.1 Overview of UAE’s telecom market
13.2 Regulatory Environment
13.2.1 Background
13.2.2 Regulatory authority
13.2.3 Liberalisation
13.2.4 VoIP prohibited
13.3 Fixed Network Operators
13.3.1 Overview
13.3.2 Emirates Telecommunications Corporation (Etisalat)
13.3.3 Emirates Integrated Telecommunications Company/du
13.3.4 TECOM Investments/Dubai Holding/Emirates International Telecommunications (EIT)
13.3.5 UAE investment companies owning telcos outside the UAE
13.4 Telecommunications Infrastructure
13.4.1 National telecom networks
13.4.2 Infrastructure developments
13.4.3 International infrastructure
14. Yemen
14.1 Overview of Yemen’s telecom market
14.2 Regulatory environment
14.2.1 Regulatory authority
14.2.2 Telecom sector liberalisation in Yemen
14.2.3 Privatisation
14.3 Fixed network operators in Yemen
14.3.1 TeleYemen/Yemen International Telecommunication Company
14.3.2 Public Telecommunications Corporation (PTC)
14.4 Telecommunications infrastructure
14.4.1 National telecom network
14.4.2 International infrastructure
15. Glossary of Abbreviations
Table 1 - Total telecommunications market revenue in Bahrain - 2003 - 2008
Table 2 - Telecommunications market revenue by sector in Bahrain - 2008
Table 3 - Fixed-line ARPU in Bahrain - 2007 - 2009
Table 4 - Batelco revenue and profit - Bahrain and other - 2005 - 2009
Table 5 - Batelco revenue by division - 2005 - 2008
Table 6 - Batelco total group mobile subscribers - 2005 - 2009
Table 7 - Fixed lines in service and teledensity in Bahrain - 1995 - 2011
Table 8 - Fixed lines in service and teledensity in Iran - 1995 - 2011
Table 9 - Fibre optic network growth in Iran - 2004 - 2009
Table 10 - Fixed lines in service and teledensity in Iraq - 1990 - 2011
Table 11 - Bezeq share of fixed-line sector revenue in Israel - 2008 - 2009
Table 12 - International call operators market shares in Israel - 2009
Table 13 - Bezeq divisional revenues - 2007 - 2010
Table 14 - Active Bezeq fixed-line subscriber lines, MOU, and monthly ARPL - 2003 - 2010
Table 15 - Bezeq International outgoing calls market share - 2005 - 2009
Table 16 - HOT divisional revenue - 2006 - 2009
Table 17 - HOT domestic telephony subscribers - 2005 - 2009
Table 18 - 013 NetVision revenue and profit - 2006 - 2009
Table 19 - 012 Smile.Communications/012 Smile Telecom revenue and profit - 2005 - 2009
Table 20 - 012 Smile VoIP lines - 2006 - 2010
Table 21 - Xfone revenue and profit - 2006 - 2009
Table 22 - Fixed lines in service and teledensity in Israel - 1995 - 2011
Table 23 - Telecommunications investment by sector in Jordan - 2005 - 2009
Table 24 - Jordan Telecom Group profit and revenue by sector - 2004 - 2009
Table 25 - Jordan Telecom Group divisional subscribers - 2005 - 2009
Table 26 - Fixed lines in service and teledensity in Jordan - 1995 - 2011
Table 27 - Fixed lines in service and teledensity in Kuwait - 1995 - 2011
Table 28 - Fixed lines in service and teledensity in Lebanon - 1996 - 2011
Table 29 - Omantel fixed-line ARPU - 2003 - 2009
Table 30 - Omantel financial data - 2003 - 2009
Table 31 - Postpaid and prepaid fixed-line subscribers in Oman - 2005 - 2010
Table 32 - Fixed lines in service and teledensity in Oman - 1995 - 2011
Table 33 - Qtel group mobile and fixed-line revenue and net profit - 2005 - 2010
Table 34 - Qtel Qatar mobile and fixed-line revenue and net profit - 2005 - 2010
Table 35 - Qtel Qatar fixed-line revenue breakdown - 2008 - 2010
Table 36 - Qtel Qatar fixed-line subscribers and ARPU - 2007 - 2010
Table 37 - Fixed lines in service and teledensity in Qatar - 1995 - 2011
Table 38 - Mobile, fixed-line and total telecommunications services revenue in Saudi Arabia - 2001 - 2009
Table 39 - STC Group revenue and profit - 2005 - 2010
Table 40 - Fixed lines in service and teledensity in Saudi Arabia - 1996 - 2011
Table 41 - STE Revenue by sector - 2005 - 2007; 2009
Table 42 - Fixed lines in service and teledensity in Syria - 1995 - 2011
Table 43 - Telecoms revenue and investment in Turkey - 2004 - 2009
Table 44 - Alternative fixed-line operators market share in Turkey - 2007 - 2009
Table 45 - Turk Telekom - Revenue, profit and EBITDA - 2007 - 2010
Table 46 - Turk Telekom - Fixed-line revenue, EBITDA and PSTN ARPU - 2007 - 2010
Table 47 - Fixed lines in service and teledensity in Turkey - 1995 - 2011
Table 48 - Total telecommunications revenue by sector in UAE - 2007 - 2009
Table 49 - Total fixed network revenue and ARPU in UAE - 2007 - 2009
Table 50 - Etisalat group revenues and divisional representation - 2005 - 2010
Table 51 - du revenue and profit/loss - 2006 - 2010
Table 52 - Fixed lines in service, teledensity and subscribers by operator in UAE - 1995 - 2011

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