Yemen is very much the poorest country in the Middle East with approximately 39% of the population living below the poverty line, according to Research & Markets. Yemen’s economic difficulties are exacerbated by declining oil production which accounts for a significant proportion of the economy and recent political unrest.
Yemen’s telecom sector is representative of the growth opportunities that abound in such a developing market. Fixed lines subscriptions are increasing, with a penetration rate of less than 5% indicating significant room for growth. Given that over 60% of the population lives in rural areas a significant amount of fixed line investment has been in the form of wireless local loops based on a variety of technologies. In addition the incumbent has invested in core and transmission network infrastructure to expand bandwidth and to support the ability to offer new products and services.
Broadband Internet subscribers are growing steadily but from a very small base, with services available via ADSL. Internet cafes are a popular Internet access method given low PC ownership. Despite challenges such as low PC penetration and illiteracy Yemen has launched a number of digital economy initiatives centred on e-government, e-education and e-health. Social network sites such as Facebook are growing in popularity and have been credited with allowing protestors to organise the recent anti government protests.
Mobile telecoms continues to be the big success story in Yemen. Steady growth has seen penetration rates rise to over 40%. Competition is healthy with four mobile network operators offering services. Foreign investors include regional mobile operators Batelco of Bahrain and MTN of South Africa. Attracting investment is Yemen’s low mobile penetration, the lowest in the Middle East. Yemen’s mobile data market is also in the nascent stages of development, with mobile messaging and mobile Internet access offered. The latter has the potential to develop into a significant market given the lack of competition in the fixed broadband market and low PC penetration.
As most other Middle East markets are becoming totally saturated, Yemen will remain of interest as one of the few markets with potential for growth.