SmartPhones

Despite fierce competition in a crowded market, Saudi Arabia’s telecoms sector should see continued growth, driven largely by the expanding mobile internet and fixed broadband segments, according to recent reports from local investment groups. The Kingdom’s tech-savvy, high-income, younger generation, in particular, is earmarked to play a major part in boosting spending on data services and related products.

With rising smart phone penetration and upgraded networks, data fees will make up a greater portion of telecoms revenues in the coming years, Al Rajhi Capital said in a December report on the industry.

The Saudi mobile market is the most competitive in the Arab world, according to the Cellular Competition Intensity Index. While the mobile phone penetration rate stands at 181.6%, or nearly two subscriptions per individual, the still-young broadband market offers Saudi’s telecoms industry opportunities for growth. A report released in March by investment firm NCB Capital Total found that total revenue for the Kingdom’s three mobile operators, Saudi Telecommunication Company (STC), Mobily and Zain, is expected to increase 7% year-on-year (y-o-y) in 2013.

All three firms launched long-term evolution (LTE) networks in 2011, the service otherwise known as 4G. By the end of 2012, mobile broadband subscriptions had reached 12.3m, representing 42.1% of the population, and up from 9.7% in 2010, according to figures from the Communications and Information Technology Commission (CITC), Saudi Arabia’s regulator. Just over 40% of households had fixed broadband subscriptions in 2012, up from 27% in 2010.

The CITC attributes the uptick in data subscriptions in large part to growing smart phone penetration and competitive data packages being offered by providers. Both trends are expected to continue, with Saudi spending on ICT products forecast to grow by at least 10% in 2013. The regulator said spending would be spurred primarily by the purchase of smart phones, high-speed networks and interactive applications.