2014 Middle East - Mobile Voice and Mobile Operators Market

Middle East mobile operators look to diversify in a challenging market

Generally across the Middle East mobile penetration levels are high; creating an environment where it is increasingly harder for operators to grow mobile voice revenue. In addition, the rise of Over-The-Top (OTT) service providers and introduction of MVNOs in some markets is creating increased competition for existing operators. To address these challenges, operators are trying different strategies such as moving into fixed services, expanding into other countries, improving mobile packages or focusing on mobile broadband services.

While the region has matured in terms of mobile subscriber penetration; this tech-savvy population has been quick to embrace smart phones, creating one of the hottest markets for smart phone growth worldwide, behind Latin America.

Looking at some of the countries individually; we can see that while Bahrain possesses one of the smallest markets in the Middle East, its telecoms market is arguably one the most developed. Early to liberalise its market, it is one of the most open in the region, underpinned by a relatively well-developed regulatory environment.

Iran’s telecoms market is one of the largest in the Middle East given the size of its population. Mobile services are widely available in Iran with services available from a total of six mobile network operators, three of which are able to offer services on a national basis. Competition has vastly improved Iran’s mobile market, which was previously characterised by the huge level of unmet demand for services. All this has now changed and Iran has seen huge growth in mobile subscriber numbers in response to competition. Current penetration levels indicate room for continued revenue growth.

Mobile services have been the big success story of telecoms in post-war Iraq. The market has grown very quickly, partly due to the lack of fixed-line service. Three mobile network operators hold national licences: Zain Iraq, Asiacell and Korek Telecom. As part of their licence conditions, the mobile network operators are obliged to launch Initial Public Offerings (IPO)s.

Israel possesses an extremely competitive market served by five mobile network operators, Partner, Cellcom, Pelephone, MIRS and Hot Mobile, as well as number of Mobile Virtual Network Operators (MVNO)s. Strong competition is evident due to the range of competing mobile products that offer unlimited voice and text, full mobile number portability and regulatory barriers that prevent operators from linking sales of handsets to services or offering discounts to customers that commit to longer periods.

An important showcase of the Middle East’s emerging ICT sector, Jordan boasts a burgeoning technology start up industry and a modern liberalised telecoms market.

Kuwait possesses a competitive mobile market as evident by current penetration levels. Services are offered by Zain, Wataniya and Viva. Penetration levels rose significantly after Viva entered the market.

Lebanon holds a unique position in the Middle East telecoms industry given the continued high level of government ownership. While most fixed line incumbents in the region are government owned, Lebanese government ownership extends to the country’s two mobile operators. Market liberalisation and privatisation is a contentious issue as revenue from the telecoms industry contributes a significant proportion of the government’s budget.

Oman’s mobile market continues its role as the most dynamic telecoms sector in the region. Mobile network operators OmanTel and Nawras compete against several MVNOs. Underpinning competition is implementation of mobile number portability, with Oman one of the first countries in the region to implement the regulatory requirement. Prepaid represents the overwhelming majority of mobile connections.

Mobile services in Qatar are offered by a duopoly comprised of Ooredoo and Vodafone Qatar. Since launching services Vodafone Qatar has managed to grab a third of the market, with its share likely to increase due to introduction of mobile number portability.

Mobile subscribers are actually declining in Saudi Arabia due to a crackdown on the number of illegal immigrant workers in the country along with new restrictions on the number of pilgrim workers allowed.

Syria’s mobile market is served by a duopoly comprised of two operators, MTN Syria and Syriatel. Both have been impacted by the ongoing civil war, with base stations taken out of commission. Mobile data services are becoming an increasingly important source of new revenue as the mobile voice market begins to mature.

Turkey’s mobile market is one of the largest in the region due to its sizeable population. Healthy infrastructure-based competition exists between three mobile network operators which have built GSM/HSPA networks.

In 2014, operators in the United Arab Emirates, similar to the rest of the world, are struggling with how to combat the impact of Over-The-Top (OTT) services - which on a global level are beginning to erode operators’ revenues. Mobile voice revenue growth is limited in the UAE due to the already high penetration levels. In contrast; mobile penetration levels are steadily increasing in Yemen and current penetration levels indicate there is much room for growth.

Data in this report is the latest available at the time of preparation and may not be for the current year