Sep 16 2012
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Saudi's Mobily Eyes Data, Business Segment to Boost Revs
Sunday, Sep 16, 2012
--Expects data to contribute 30% of revenues by year-end
--Looking to push smartphones to increase ARPU
--Still in talks with MVNO companies, sees service possible by 3Q 2013.
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--As domestic competition chips away steadily at voice revenues for mobile telecom operators, Saudi Arabia's Etihad Etisalat Co., is looking to tap the potential demand in the business customer segment which is growing underpinned by a booming economy and record levels of government spending in the Kingdom.
Some of these drivers "go to our core business that is the data, some of them address a segment which is the business, and some of them expand our value chain through partnerships," Mr. Kaf said, adding that he expected the business segment to contribute 10% to total revenues in 2012.
Mobily , which is 27.4% owned by Emirates Telecommunications Corp., is the second largest telco in Saudi Arabia, where it competes with market leader Saudi Telecom Co., and the newest entrant, Zain Saudi Arabia.
Although the opening up of the mobile phone market in Kingdom led to a surge in subscriptions due to competitive pricing and broader service offerings, the market is now seen to be fast approaching saturation, forcing operators to diversify revenue streams.
Mobily , which launched its long-term evolution technology at the end of last year, is targeting 30% of its revenues from data by the end of 2012, Mr. Kaf said. High-margin data services contributed 25% to total revenue in the last quarter, up from 23% in the previous quarter.
Mr. Kaf termed LTE, which allows high-speed data transfers, as "the dark horse in the mobile broadband" race that will emerge a winner in the long run. The telco is positioning itself to cope with rampant growth in data traffic from smartphones driven by sizeable young population. According to the kingdom's Communication and Information Technology Commission, total subscriptions to mobile broadband reached 11.9 million at the end of first-quarter 2012 from 11.3 million at 2011-end.
To leverage this technology, Mobily has been pushing smartphones in the Saudi market, helping to create "stickiness and acquisition retention of the customer," the CEO said, adding that smart phones could "actually triple your ARPU [average revenue per user]."
The Saudi telco also plans to tap into the kingdom's business sector that has been booming lately underpinned by robust economic growth in the country. Saudi Arabia's GDP is forecast to grow at 6% in 2012. This growth "is attracting a lot of businesses," Mr. Kaf said.
Meanwhile, Mobily is still in talks with various Mobile Virtual Network Operators, or MVNO, to rent capacity on its network, Mr. Kaf said. He sees the service becoming operational only by the third-quarter of 2013.
"If the license was given by the end of this year, I think we will see them up and running by the third-quarter of next year. I don't think an MVNO will take more than one quarter to launch it services," said Mr. Kaf.
Dubai-based Friendi and Oman's Majan Telecommunications, or Renna, are among those who are considering expansion into Saudi Arabia via an MVNO deal. Dubai's Emirates Integrated Telecommunications Co., or Du, has also expressed interest in expansion via an MVNO, without specifying any markets.
Write to Shereen El Gazzar at Shereen.email@example.com
Copyright (c) 2012 Dow Jones & Co.
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