Sunday, September 07, 2008

GCC - expansion

GCC telecoms in expansion spree

In the recent years the GCC telecom players are on an expansion spree following measures from Saudi Arabia, Bahrain, Oman, and UAE to allow additional service providers in the respective countries. This should result in inducing higher competition and further drop in ARPUs in the region and resultant contracting profitability of the players. The service providers should aim to increase their market shares by providing differentiated value added services and providing content based services (like mobile video streaming) to enhance the ARPUs. The GCC region registered a decline of 6.9% in fixed line subscribers from 5.8mn subscribers in 2006 to 5.4mn subscribers in 2007 on account of increasing shift of customer base to the more convenient mobile voice services.

Increasing disposable income and convenience of use is encouraging the cellular penetration in the region. Other important contributing factor to the increased cellular penetration is the relaxation in telecom regulations allowing second or third player in each country apart from the incumbent local carriers (usually the first state run Telco service provider in each country). The GCC region registered a 5 year (2002-07) growth in cellular subscribers at a CAGR of 37.6 %. The MENA region has seen the highest worldwide 5 year (2002-07) growth in cellular subscribers at a CAGR of 52.9% against the worldwide increase of 23.3%. With the country wise cellular markets reaching or crossing the 100% penetration levels within the GCC region, all the six member countries registered double digits CAGR during the 5 year (2002-07) period.

In 2007, Asia and MENA region were the major growth contributors with YoY growth rates of 36.8% and 33.9% respectively. UAE topped the list of high growth contribution with a YoY growth rate of 34.6% with its internet user base increasing from 1.7mn in 2006 to 2.3mn in 2007. The next highest contributor was Saudi Arabia that reported a 31.9% YoY increase in the internet users’ base from 4.7mn in 2006 to 6.2mn in 2007. The high proportion of youth in the demographics, with 55% to 65% of the total population under the age of 30 years is driving the internet usage in the GCC region. The higher rate of internet penetration and improved infrastructure services in terms of shift from Dial up to cable is helping increase the broadband subscriber base in the GCC region. The analysis of 5 year (2002-07) CAGR in broadband subscribers worldwide indicates that the GCC region is amongst the top three growth regions in the world. The worldwide broadband subscriber base increased at a 5 year (2002-07) CAGR of 38.9%.

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