Penetration rates high but competition healthy in Bahrain’s telecom sector

Despite being the smallest market in the Middle East by population size, Bahrain has one of the most competitive telecom sectors in the region. Early market liberalisation and a well-established regulatory authority have both been factors in this, according to new data from Research & Markets.

Incumbent Batelco shares the fixed-line market with fourteen other operators providing international calling services using international direct dial, carrier pre-selection or prepaid calling cards. Infrastructure is excellent - Batelco completed the rollout of a Next Generation Network in January 2009.

Around 70% of international call minutes originating from fixed lines use prepaid calling cards. The introduction of the cards caused average revenue per minute to fall by nearly half over the two years to 2007. Like other Gulf Cooperation Council (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.

Competition has accelerated in the broadband market during 2008 and 2009 with the launch of WiMAX services by two alternative operators. By mid-2009 WiMAX had a 30% share of the broadband access market, with the market share of Batelco's ADSL services falling to 54%. Mobile broadband had a 13% market share after rocketing to 14% in 2008 and then levelling off.

In the mobile market, Batelco and a subsidiary of Zain of Kuwait have been joined by a third operator: Viva Bahrain, owned by STC of Saudi Arabia, which launched services in March 2010 into a very crowded market. As in other Gulf country markets, mobile penetration is at stratospheric heights – but as with other high-expat markets, the population turnover gives room for growth. It was also thought that STC was particularly interested in buying the licence as a defensive move in its home market to prevent the loss of customers to Zain, now operating in both markets, amongst the many subscribers who travel back and forth on the causeway between Bahrain and Saudi Arabia.

With competition strong in its home market, Batelco as with other operators in the region has ventured abroad to less developed markets in search of profits - although not on the scale of Zain or Etisalat of the UAE. Batelco has subsidiaries in Kuwait, Jordan, Yemen and Saudi Arabia and a 49% share in S Tel, a recently established Indian mobile operator.

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