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Kuwait Telecommunications Report Q3 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: July 2009 Product Code: R302-7322 Description BMI’s latest update on the Kuwaiti telecoms market contains revised forecasts for the development of thecountry’s fixed-line, internet and mobile markets. Our new fixed-line forecast for Kuwait envisages asteady increase in the number of fixed lines for the duration of our forecast period. Growth will be drivenby the country’s expanding population, as well as continued demand for wireline services - especiallyfrom business customers. We estimate that Kuwait had a fixed-line penetration rate of 16.8% at the end of2008; in terms of penetration levels, this positions Kuwait at the mid-point of the Middle Easterncountries surveyed by BMI. The relatively low penetration rate means that the sector has a reasonabledegree of growth potential. Nevertheless, we expect the rate of growth to slowly decline as thepenetration rate rises. Mobile substitution has already had an impact on the demand for traditionalwireline services. Meanwhile, the provision of fixed-line services remains under the monopoly control ofstate-owned Kuwait Public Telecom. If this monopoly was broken and the sector opened to competition,this could provide the sector with an important growth stimulus.With regard to internet services, we have raised our estimate for the number of internet users at the end of2008, and lowered our estimate for the number of broadband subscribers. We now estimate that Kuwaithad over 1.17mn internet users at the end of 2008 (equivalent to 35.5% penetration). Although theMinistry of Communications (MoC) has not published data on the number of internet users, mostindependent reports suggest that over 31% of Kuwaitis were regular internet users at the end of 2007. Webelieve that steady growth in the level of internet usage has continued - a development which indicatesgrowing demand for internet-based services. However, the sector is characterised by a low level ofcompetition, high service prices and state restrictions on certain websites. In February 2009, the MoC wasreported to have issued a memo to all of Kuwait’s ISPs asking them to block access to YouTube. Otherwebsites face restrictions and ISP blocking, including Skype. The imposition of usage restrictions, together with the high prices and lack of choice for consumers, isbelieved to be having a dampening effect on internet growth. The impact has been most notable in thebroadband market; subscriber penetration was estimated at just 1% at the end of 2008. BMI is optimisticthat the next few years will see the arrival of greater choice for broadband customers, as well as theintroduction of a wider range of services. According to reports, WiMAX-based internet services will soonbe available in Kuwait. They are to be offered by Mada Communications (formerly known as ArabTelecom), which has been developing its WiMAX network since early 2007. Mada was due to launch itsfirst commercial WiMAX services in Q109. Meanwhile, although IPTV services are not currently offered in Kuwait, it was reported in March thatIraq’s Kalimat Telecom had entered a 50:50 joint venture with Hong Kong’s PCCW to launch IPTV andmobile TV services in both Iraq and Kuwait. Commercial launch is expected in Q409 or early 2010. Asnoted above, Kuwait has fallen from sixth to seventh position in our latest set of Business EnvironmentRankings for the Middle East. The reason for Kuwait’s weaker overall position is the lower score which itreceives in both the telecoms market and country structure categories. The lower telecoms market scorepartly reflects the weaker ARPU which was reported by both of Kuwait’s leading cellular operators, Zainand Wataniya. Meanwhile, the lower country risk score reflects the weaker GDP per capita which ispredicted for 2009 and 2010. Table of Contents
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