Saudi Arabia's ICT market is the biggest in the Middle East in terms of capital value and volume of spending. The future is promising, with both government and businesses keen on keeping up to date with the latest telecom developments. Smart technologies, in particular, offer interesting opportunities for investors.
The mobile market in Saudi Arabia is fiercely competitive. Reported penetration rates are upward of 180%, but mobile indicators tend to fluctuate due to the country's fluid population with large numbers of pilgrims and expatriate workers. Services are provided by three Mobile Network Operators (MNOs) STC, Mobily, and Zain and by two Mobile Virtual Network Operators (MVNOs) Virgin Mobile and Lebara. Saudi Arabia is the second country in the gulf region (after Oman) to have allowed MVNOs, but other countries are likely to follow suit, as Saudi Arabia is generally considered the region's trendsetter.
The fixed broadband market is experiencing a major technology shift from ADSL to fibre, with STC expanding FTTH coverage to most urban centres, and another two companies Go Telecom and Mobily also offering FTTH services.
Mobile broadband subscriptions outnumber fixed broadband subscriptions by a long way in Saudi Arabia, which reflects the country's large household size. While fixed broadband normally serves the home, mobile broadband subscriptions are individual. Therefore, mobile broadband subscriptions are likely to continue growing beyond the 100% per capita penetration threshold due to some users having more than one mobile connected device (for example, a smartphone plus a tablet), but fixed-line broadband will hit market saturation when household penetration reaches 100% which is not far away for Saudi Arabia.
Virgin Mobile launched MVNO services in September 2014, and Jawraa Lebara did so in the following December. Arabsat is building two new satellites, the HellasSat 4/SaudiGeoSat 1 and the Arabsat 6A, both scheduled for launch in 2018. Saudi Arabia will be connected to the SEA-ME-WE 5, which is due for completion in 2016. An agreement under which Mobily would become the majority stakeholder of GO Telecom was cancelled in May 2014, as well as a deal granting GO Telecom the rights to use 50,000 fibre-optic access points belonging to Mobily, but Go Telecom signed a new rights of use deal with STC, which agreed to grant GO Telecom access to 30,000 access points. Having revoked Axiom Telecom's MVNO licence, the Saudi telecom regulator plans to resubmit it for public tender. Virgin Mobile provides MVNO services over STC's network, offering two service brands: Virgin Mobile and FRiENDi.
Companies mentioned in this report
Saudi Telecom Company (STC)/Bravo, Integrated Telecom Company (ITC)/Bayn Consortium, GO Telecom/Etihad Atheeb, Mobily/Ettihad Etisalat/Bayanat Al-Oula, Zain KSA, Arabsat, ART, Orbit, Rotana, Lebara KSA/Etihad Jawraa, Virgin Mobile Middle East & Africa (Virgin Mobile MEA), Axiom Telecom.