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Saudi Arabia Telecommunications Report Q3 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: July 2009 Product Code: R302-7423 Description Our latest update on Saudi Arabia’s telecommunications market includes expanded market data sectionscovering the country’s fixed-line and internet sectors. Based on the latest data available, we now predictthat the Saudi fixed-line market will shrink in 2009, as residential customers continue to migrate tomobile and WiMAX-based alternatives. The Saudi telecoms regulator, the Communications andInformation Technology Commission (CITC), suggested that the fixed-line market saw stagnant growthin 2007. However, the regulator also noted that the number of residential fixed lines went into declineduring the year. Meanwhile, although business demand for traditional fixed voice telephony has remainedrelatively robust in recent years, BMI expects this situation to change now that competition has arrived inthe wireline market.In April 2007, the Saudi wireline market saw its first move towards the introduction of competition, withthe licensing of three new fixed-line operators. The three companies which received fixed-line operators’licences include Saudi Arabia’s Etihad Atheeb Group (in which Bahrain’s Batelco has a 15% stake), aconsortium led by US carrier Verizon (operating under the Optical Communications brand) and a groupled by PCCW of Hong Kong (operating under the Al-Mutakamilah brand). In June 2009, it was announced that Etihad Atheeb had launched fixed voice, internet and data services intwo of Saudi Arabia’s largest cities, ending Saudi Telecom Company’s (STC) monopoly over theprovision of fixed-line services. The network, branded GO, has been deployed using technology suppliedby Motorola and China’s ZTE. Etihad Atheeb has unveiled plans to invest US$1bn in its fixed-lineoperation in the first five years of business. The company plans to target government and industrial hubsas well as regions not covered by STC. STC has responded to the onset of wireline competition by reducing the tariffs on its own DSL internetservices. DSL services have been responsible for much of the broadband growth to date. However, theintroduction of WiMAX services is predicted to have far-reaching consequences for the development ofSaudi Arabia’s broadband market. The proliferation of WiMAX will help to drive increased broadbandtake-up through lowering prices and increasing consumer choice. In 2009, BMI predicts that the Saudibroadband subscriber base will expand by around 51%. By the end of the year, we anticipate the numberof broadband connections rising to over 1.55mn. Our newly revised broadband forecast envisages nearly3.5mn broadband subscribers at the end of 2013, equivalent to 12.6% penetration. Saudi Arabia has dropped from second to third place in BMI’s latest Business Environment Rankings forthe telecoms markets of the Middle East. The change of position is partly due to the stronger scorereceived by Bahrain, which has risen from third to second place in our ratings. However, this quarter alsosees a slight drop in Saudi Arabia’s country structure score. The lower country structure score reflects theslowdown in GDP per capita growth which is predicted for 2009 and 2010. Table of Contents
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