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Research and Markets: Middle East shows higher penetration, lower ARPU

Mobile telephony and data in fourteen Middle Eastern countries has just been by Research and Markets in its Middle Eastern Mobile Voice and Operators Marketreport. Higher penetration rates and consequent lower ARPU constitute a key finding.

Research and Markets has announced the addition of the Middle Eastern Mobile Voice and Operators Market report to its offering. The 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. Among 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 a much lesser economic slowdown and partly due to saturated markets (and perhaps distraction) because of 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.

Several highlights in the Middle Eastern market are identified by Research and Markets.

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 license 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 the 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.

Kuwait has been the odd-one-out among 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 with the launch of the third operator, as 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.

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