Saudi subscribers up, with 3G likely to drive demand further

At the end of March 2010 there were 53.3mn subscribers in the Saudi mobile market, according to market data published by the CITC. This reflected growth rates of 3.3% q-o-q and 16.1% y-o-y. It also showed large net additions of 1.7mn subscribers, compared with 1.1mn in Q110. Saudi Arabia's mobile subscriber base at the end of Q111 brings mobile penetration to 200%, according to the latest data from Research & Markets.

Although impressive subscriber growth in Q410 and Q111 suggest continued subscriber growth, this may not necessarily be the case; operators are shifting their focus onto higher value subscriptions, and inactive SIMs are likely to be disconnected. This strong growth is unlikely to continue and there will be a considerable decline in growth leading up to 2015.

Saudi Arabia's highly developed market means operators are targeting revenue growth through mobile content and mobile broadband. The latter service is particularly suited to Saudi Arabia, allowing for rapid roll-outs across the country, particularly where the terrain is less than hospitable. Mobile broadband will likely boost 3G connections as well as the wider broadband market, bringing more of the population online.

Increasingly, Saudi subscribers will aim to upgrade their existing connections from 2G to 3G, providing real growth in the market. For operators, this creates an opportunity to boost revenues by encouraging greater data usage and the abundance of smartphones available in the market will drive this. Meanwhile, Mobily intends to launch commercial LTE services in November 2011, which BMI expects will hit data usage in Saudi Arabia.

In the fixed-line market, Q111 market data published by the CITC show an uptick in fixed-line subscriptions during the first three months of 2011, suggesting that subscriber numbers will rise slowly from demand for multiplay services. By 2015 the penetration rate will likely have declined to more than 15%, with the rate of growth so slow that population growth will overtake it, pushing down the penetration. Fixed-line service providers will increasingly rely on broadband to drive revenues in future, catering to subscriber demand for internet and data services.

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