Are there any new investment opportunities in telecom sector?
Saudi Arabia has the largest telecom market in the region by both capital volume and spending, estimated at SR180 billion ($48 billion). With 43 million subscribers, mobile penetration sitting at 131 percent and some of the highest data usage per capita globally, the sheer scale of the market leads it to be the Middle East’s most important telecom market.
After the Saudi Communication and Information Technology Commission (CITC) has released an update to regulate the quality of services by telecommunications service providers (TSP) in the Kingdom, it is believed that telecommunication providers who intend to invest in enhancing the quality of service and problem-solving strategies will gain a broader market share than what they have today, and possibly increase their rates.
Recently CITC approved expanding the scope of unified license services for the three mobile network operators, enabling them to offer all services under a single license, including mobile and fixed-line services, Internet of Things, artificial intelligence and digital application services.
Obviously, after launching the first 5G network in the Middle East, competition in the telecommunications sector is expected to further increase significantly
Basil M.K. Al-Ghalayini
As for the tower landscape, Saudi Arabia has an estimated 35,400 towers, with Saudi Telecom Co. having the largest portfolio. Infrastructure sharing in the Kingdom has to date been limited, with less than 2 percent of sites believed to have more than one tenant. In major cities, there has been some infrastructure sharing as part of mobile network operator densification plans to meet growing data usage, while in some of the country’s holy sites, where access to land is limited, infrastructure sharing has arisen out of necessity. With little infrastructure sharing, a high degree of parallel infrastructure has developed.
While 4G coverage stands close to 100 percent in Saudi Arabia, significant densification is required in the Kingdom to meet the growing data usage of citizens as well as the ICT targets of Saudi Vision 2030. The country has also laid out ambitious plans to bring broadband access with download speeds of 10Mbps to 70 percent of households in rural areas by 2020, an agreement for the third phase of which having been signed between the Ministry of Communications and Information Technology and Saudi Telecom Co. last November 2018.
The Saudi telecom sector remains promising despite its known challenges. Obviously, after launching the first 5G network in the Middle East, competition in the telecommunications sector is expected to further increase significantly.
Furthermore, CITC will continue its efforts to create an effective regulatory environment in a bid to attract and localize investments in the sector. This will create attractive investment opportunities which need to be met with skills, creativity and rich experiences of the private sector.
• Basil M.K. Al-Ghalayini is the Chairman and CEO of BMG Financial Group.
