GITEX Technology Week has been the biggest annual event in the Middle Eastern telecoms sector’s calendar, and this year was no exception. From talking with operators and vendors alike, it is clear that the key issues surround how new infrastructure- and service-based competition will arise through WIMAX operators and MVNOs, respectively. It was also apparent that major operators continue to be interested in expanding their market presence across the region, and that consolidation between some incumbents could occur following the sale of stakes in two operators in Gulf countries.
The prospects for WiMAX in the region stimulated a lively debate among rival vendors that were promoting the merits or otherwise of different wireless technologies. WiMAX supporters such as Alcatel-Lucent and Intel were keen to point out that WiMAX technology, unlike LTE, is available now, but licensing for the appropriate frequency range has not yet occurred throughout the Middle East. More MNOs have been able to provide broadband access services via HSPA than via WiMAX because of this issue, although these two approaches are incomparable in a technological sense. As pointed out by Ericsson, what matters to the consumer is not the technology, but whether it works and is available. The vendor suggested that indoor coverage, ease of use and level of mobility were key to the success of any wireless broadband technology. Mobility may be of some importance, but broadband penetration is low in the MENA region, and many consumers that want broadband access at home or in the office are simply looking for a service that competes with DSL-based offers. Analysys Mason expects broadband site penetration to grow from 5.5% at the end of 2007 to 20.6% by the end of 2013. HSPA and WiMAX are likely to play an important role in providing an affordable and reliable broadband service in homes and offices as take-up increases.
The imminent launch of MVNOs was also a much-discussed topic. Among those vying to be the first MVNO in the region are i2, which holds a licence to operate in Jordan, and FRiENDi mobile, which is one of five resellers that are licensed to offer services in Oman. Both operators are keen to expand their market presence across the region. i2 has the advantage of owning handset retailing and mobile content businesses; distribution and content will be key to the success of MVNOs in the region. FRiENDi is a start-up business, but its management team has experience from previous work with other operators in MENA and beyond. Some markets in the MENA region appear to be progressing towards service-based competition, but not all markets are at the same stage. For example, MVNOs are unlikely to enter the Saudi Arabian market in the near future, despite confirmation from the country’s regulator that a study on this issue is underway, because a third MNO (Zain) recently launched services there.
Many participants at GITEX expressed concerns that the financial crisis is working its way towards the MENA region, but operators continue to seek investment opportunities – in the form of either licensing or privatisation. The prospects for a third GSM licence in Morocco, a third MNO in Bahrain and the sales of stakes in Batelco and Omantel will be of interest to the region’s major players. However, other opportunities are undermined by political or regulatory uncertainty. Delays and other issues in the licensing and privatisations in Algeria, Egypt, Iran and Lebanon may lead to operators prioritising other opportunities.
These issues and more are changing the industry dynamics across the MENA region. The recently published Analysys Mason report, MENA telecoms market: strategies and opportunities 2008–2013, looks at how the industry will develop during the next five years and how operators and vendors can make the most of the changing environment.