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Kuwait Telecommunications Report Q2 2008Product Type: Market Research ReportPublished by: Business Monitor International Published: March 2008 Product Code: R302-2807 Description In November 2007, it was revealed that Saudi Telecom Company (STC) had won the Kuwaitigovernment’s auction for a 26% stake in the country’s yet-to-be-launched third mobile operator with a bidof KWD248.7mn (US$908mn). STC offered KWD0.923 per share for 130mn shares in the new cellco,beating offers from eight rival bidders which included Etisalat of the UAE, Turkcell of Turkey andBahrain’s Batelco. A further 50% of the new cellco is to be sold off in an initial public offering in theearly part of 2008, with the Kuwaiti government retaining a 24% interest. The new operator will competewith existing players Zain and Wataniya. BMI believes that a third operator will help to create an even more intensely competitive market, both interms of subscriber numbers and value. Although we previously suggested that Kuwait’s wireless marketwas becoming increasingly saturated, with a penetration rate of around 100%, we have since adjusted thisfigure and now put Kuwait’s mobile penetration rate at end of 2007 at 91.5%. This lower figure is mainlythe result of revised demographic figures, which give Kuwait a larger population than we previouslythought. However, it is also important to consider the proportion of multiple SIM holders in Kuwaitwhich, once taken into account, would give Kuwait a lower penetration rate still. All this suggests thatthere is more scope for further subscriber growth in the months ahead, as well as considerable reason toexpect intensive competition between the sector’s three operators. At the end of September 2007 (latestdata available), there were 2.683mn mobile subscribers in Kuwait, reflecting 5.8% y-o-y growth. We nowbelieve that market ended the year with 2.735mn mobile customers, reflecting an 8% growth rate and theaddition of 205,000 new customers during the year. We forecast that the sector will expand by 7.5% in2008 and by 7% in 2009, this growth being reflective of the heightened market competition. In other news, a senior civil servant at Kuwait’s Ministry of Communications (MoC) has reportedlysuggested that Kuwait’s new telecoms regulator will be launched within eight to 12 months. The official,whose comments were reported in November 2007, suggested that the country would get an independenttelecoms regulator before the recently licensed third mobile operator began commercial operations. Kuwait’s third mobile operator is expected to launch services sometime during summer 2008.The news that the MoC may accelerate its efforts to establish an independent telecoms regulator will bewelcomed by mobile operator Zain. Kuwait’s lack of an independent telecoms regulator is understood tohave been one of the reasons behind Zain’s recent decision to move its international headquarters toBahrain. BMI believes that the creation of an independent regulator could herald a new era ofliberalisation and should put pressure on operators to improve service quality. The high cost of internetand broadband services are thought to be one of the reasons for the country’s low rate of broadbandpenetration; at the end of 2007, just 3.3% of the Kuwaiti population had a broadband internet connection. Table of Contents
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