The Middle East mobile sector: A battlefield or a land of opportunity? (page 1 of 3)

With mobile penetration rates of well over 100 per cent in several countries and deregulation still a thorny issue in some parts of the region, you could be forgiven for thinking the Middle East offers precious little in terms of opportunity for ambitious telco operators and yet, in reality, it is one of the industry's fastest-growing markets.

The UK based research and consulting firm Analysys estimated the region's mobile sector generated revenues of $22bn last year, while the figure should grow at a rate of 10 per cent per annum over the next five years, reaching almost $40bn by the end of 2012.

Setting an example

A number of countries, most especially in the GCC, retain minimal competition in their mobile telecommunications sectors, with Qatar remaining a monopoly for Qatar Telecom (Qtel) until a second operator finally comes into the market next year, but Jordan very much sets the regional benchmark for an open market largely free from governmental restriction.

Daniel Jones, a Research Analyst with Analysys, said, 'Liberalisation of the industry has been occurring gradually across the region in recent years but, of the Middle East's main markets, Jordan, with three GSM operators since 2005, certainly stands out in terms of the level of competition.'

There is no doubt the Jordanian market is fiercely competitive with the three GSM operators - Zain, Orange and Umniah - fighting for market share in a nation of just over six million people and with a fourth operator, Xpress, providing services via an integrated digital enhanced network (iDEN).

The kingdom's Telecommunications Regulatory Authority, displaying its continued desire to liberalise the mobile industry, has also approved the establishment of mobile virtual network operators (MVNOs), which do not own their own networks but lease wireless capacity from operators that do.

The possible presence of even more service providers might seem a step too far in a nation with a population of around 6.3 million, but the Jordanian based research firm Arab Advisors calculated that the country had an effective mobile penetration rate of just 47.9 per cent in July of this year.

A gulf in the Gulf

Jordan's liberalised mobile telco sector sits in stark contrast to the situation found in several Gulf countries but deregulation is slowly beginning to have an impact and long-standing monopolies are beginning to turn into duopolies.

Alan Sinfield, the CEO of the Qatar based telecommunications and media entertainment retailer Starlink, believes the region not only requires more operators but also offers obvious potential.

'Markets such as Qatar definitely need competition now and others, such as Oman and the UAE, would similarly benefit from further competition, whether that is in the form of greenfield start-ups or MVNOs. Competition is only just starting in markets like Saudi Arabia, which due to its size, can easily accommodate more than three mobile operators and MVNOs.'

The Gulf provides some of the highest penetration rates around and Analysys estimated that Bahrain, with Batelco and Zain as its two operators, had a registered subscriber penetration rate of 135 per cent in June.

It is a daunting prospect for any new start-up operator to muscle in on what might appear to be a fairly saturated market but a mobile telco service is much more than simply the sale of cellular phone plans.

Jones commented, 'More mature markets offer the possibility of good rates of growth through the provision of a wider range of services.