Jul 18 2012
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MENA ICT indicators
Gulf citizens have surpassed most of their global counterparts in fixed and telecom subscriptions, but still lag behind in broadband penetration, according to the latest data from the International Telecommunications Union (ITU), the global telecom association.
The UAE had the highest penetration in Middle East North Africa in fixed line subscriptions, and was ranked 17th globally. Saudi Arabia, meanwhile, led mobile subscriptions with nearly two mobile lines for each citizen.
Bahrain, however, was the surprise leader in regional broadband penetration, with nearly 14% of the population subscribed to the high end network.
Not to be left behind, Qatar led the Internet penetration with nearly 86% of the population able to access the web.
Overall, the Arab States' mobile broadband subscription stands at around 10%, compared to a global average of around 18%, and a fair distance away from global leader Europe which has 54% mobile-broadband penetration.
However, Gulf states stood out as extremely well-connected hives of voice and data. Kuwait emerged as the 12th most mobile broadband-connected country in the world with a penetration rate of 63.5%. The UAE (58.4%) and Saudi Arabia (57.8%) were not far behind and were also among the most connected economies in the world.
There were some other interesting nuggets from the ITU data:
* Despite a tough political year - or perhaps because of it - Egypt's mobile subscription shot up from 87 per 100 inhabitants in 2010 to 101. Egypt also saw a 5 percentage point jump in internet penetration in 2011 compared to 2010.
* Tunisia - the first country to be hit by the Arab Spring - also saw a jump from 106 per 100 inhabitants in 2010 to 116 in 2011. However, Libya deviated from the trend as mobile subscriptions fell from 171.5 in 2010 to 155.7 in 2011.
* Syria, which is in the midst of a terrible civil war, also saw mobile penetration jump from 57.8 to 63.17 during the same period. Internet penetration also rose from 20.7% to 22.7% despite a clampdown by the Syrian regime.
* Sudan - data from the two countries was combined - emerged as the regional country with the worst penetration rates. Mobile subscriptions were 56.25%, fixed telephone subscription was 1.08 while broadband subscription was 0.04% - the lowest in the region. However, at 19%, Sudanese Internet penetration fared much better than Iraq's appalling 5%.
The ITU data reveals that while the Gulf markets enjoy strong subscriptions, other regional markets offer strong prospects, especially in broadband and in many cases the Internet.
Informa Telecoms and Media, an ICT advisory, expects mobile subscriptions to cross 250-million this year and rise to 352-million by the end of 2016.
Additionally, the average mobile penetration rate for the Middle East will cross the 100% mark in 2012, and is set to rise from 97.72% at end-2011 to 107.09% at end-2012, exceeding the mobile penetration rate in North America (US/Canada) for the first time. (The mobile penetration rate in North America at end-2012 will be 102.77%.)
Iran will continue to be the biggest mobile market in the Middle East by subscriptions with 82.91 million subscriptions forecast for end-2011, rising to 122.13 million at end-2016, Informa noted in an earlier report."Saudi Arabia has the next biggest mobile market in the region by subscriptions, with a 50.8 million active mobile subscriptions forecast for end-2011, rising to 71.32 million at end-2016," the study noted.
SOME TELCOS STRUGGLING
While such high penetration rates are great for citizens, it's leading to intense competitive and margin pressures on some of the region's largest telecom giants.
"We believe the main concern for the [Saudi telecom] sector is price-led competition, especially in the international calls segment which held-back overall margins in 2011," said Farouk Miah, analyst at NCB Capital. "We believe the telecom operators realize that price-led competition does more harm than good, and thus expect some stability in margins this year."
Mr. Miah continues to believe that the sector has good growth potential, particularly in broadband. "Profits should be driven by higher focus on value-added services (broadband) and benefits derived from international exposure."
The departure of Mohammad Omran, Etisalat's veteran chairman and STC's biggest competitor, suggests that telecom companies are facing tremendous pressure due to rising competition in its key market and challenges with its investment abroad.
It could get worse. As the UAE only has two companies competing for the market, there could be more pain for the incumbents as the regulator is looking at a third operator by 2015.
This lack of competitiveness was evident in Arab Advisors Group's Cellular Competition Intensity Index 2012. With a score of 49%, the UAE emerged as only the 15th most competitive market in the region, just above Qatar, Syria, Lebanon and Libya.
Saudi Arabia emerged as the most competitive market in the region, followed by Jordan, Palestine, Egypt and Oman.
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