IHS Global Insight Perspective | |
Significance | Mobily will be the first operator in Saudi Arabia to launch LTE. |
Implications | Mobile penetrations are rising and Mobily needs to ensure it has the most advanced mobile broadband network to maintain its customer base. |
Outlook | Mobily will benefit from the rise in multimedia devices on the market, and should in the future be able to prevent the decline in ARPUs. |
Saudi Arabian mobile operator Mobily, which is part owned by Etisalat, has announced it has awarded contracts worth 450 million riyals (USD129 million) to Samsung and Huawei to roll out Long-Term Evolution (LTE) in major cities and regions in Saudi Arabia, The Saudi Gazette reports. Etisalat has already started the roll out of LTE in its domestic market of the UAE earlier this week (see UAE: 16 February 2011: Etisalat Rolls Out LTE Network in Partnership with Alcatel-Lucent). The service would allow its 5 million broadband users to achieve speeds of 100Mbps. Chairman of Mobily Eng. Abdulaziz Alsaghyir commented on the announcement, "Mobily would be the first company in the region to operate an LTE and WiMax network using the same towers at high quality and reliability, both of which will be used to provide broadband service to densely populated areas to achieve the company's growth, efficiency and differentiation-based strategy by offering integrated fixed and mobile telecommunication solutions to maintain leadership in the data communication segment of the market."
Outlook and Implications
The Saudi operator announced its five-year strategy in May last year, allocating investment of USD1 billion over the next five years (see Saudi Arabia: 27 May 2010: Mobily Reveals Strategy for Saudi Arabia). As part of its strategy it will focus on deploying the most advanced networks in the region. Mobily's key rival is the region's largest mobile operator—Zain—which still maintains a very high market share.
LTE Drivers: With mobile penetration around 150% in Saudi Arabia, operators need to find new ways for generating revenue from their users. There has been a sharp rise in smart phone devices and in addition to this, more innovative and desirable devices, such as tablet PCs, are coming into play. These devices, combined with significantly higher available data speeds, will have a dramatic change on the user experience in the country. Mobily must provide a flow of value-added-services on its network to maintain and perhaps even build on its ARPU levels which have declining about 10% year-on-year (y/y) over the past few years.
LTE Progress in GCC: This week Etisalat partnered with Alcatel-Lucent to deploy a LTE network across the UAE, the vendor has reported in a press release. Etisalat, the incumbent operator of the region, will use Alcatel-Lucent's end-to-end High Leverage Network solution—including LTE base stations (eNodeBs), all-IP wireless Evolved Packet Core (EPC), a converged end-to-end network management solution—and a range of professional services including project management, planning, installation, commissioning and integration. Elsewhere in the region, Zain has been looking to deploy LTE and has made some progress in Bahrain; it should now be approaching readiness to deploy an LTE network this year (see Bahrain: 6 October 2009: Zain Bahrain to Pump US$50 mil. Into LTE Service with Nokia Siemens Networks). Zain is also making progress in Saudi Arabia where it has selected Motorola to deploy a LTE network (see Saudi Arabia: 15 February 2010: Zain Saudi Arabia Selects Motorola for LTE Network Deployment).