IHS Global Insight Perspective | |
Significance | A new player in Bahrain will make the country one of the most densely competitive markets in the Middle East and North Africa region. |
Implications | Existing players such as Zain offer very competitive services; Zain already has the advantage of its "One Network" enabling it to offer cheap calls to roamers on its network |
Outlook | Viva is unlikely to acquire more than a 15% market share in its first year of operation. Realistic levels will be around 10%. |
On 4 March 2010, Bahrain will launch a new operator, Viva, which is part owned by the Saudi Arabian incumbent operator STC, Gulf News Daily reports. The new operator will compete with the long-established existing players Batelco, which is also the incumbent operator, and Zain Bahrain, which as of third-quarter 2009 had a market share of 51%. Zain broke Batelco's monopoly at the end of 2003 and has been chipping away at Batelco's market share ever since.
Outlook and Implications
Viva will face some of the toughest market conditions in the Gulf Cooperation Council (GCC): both existing operators Batelco and Zain Bahrain have a relatively equal market share. This is typical of a market where prices have been relatively stable for a few years.
- Tough Market Conditions: Mobile penetration in the country is well over the norm for the region at 188% at the end of third-quarter 2009. ARPU levels, which are typically more stable than other parts of the Middle East and North Africa region, are now at around US$26. Viva will have to launch with significantly lower prices to acquire market share.
- Market Competition: Although the incumbent Batelco has faired reasonably well in the country, it has struggled against one of the region's largest operators, Zain, which not only has a reputation for an excellent standard of service but also offers its "One Network" platform that enables its prepaid users to roam in the other countries in which it operates at local rates. This is particularly useful as Bahrain borders with Saudi Arabia; the route between the two countries has a very high level of traffic. The growing number of customers who use the Saudi Arabia-to-Bahrain route will be particularly beneficial also for Viva, as it is part owned by STC, which is the incumbent of Saudi Arabia.
- Market-Share Expectations: STC will soon be operational in three GCC markets: Saudi Arabia, Kuwait, and Bahrain. In Kuwait STC launched as Viva as the third operator at the end of 2008, and in just over a year it acquired a 13% market share. Market conditions in Kuwait were still tough as mobile penetration was around 120% at the time, although it is some way off Bahrain's mobile penetration rate of 188%. When Zain launched as the third mobile operator in Saudi Arabia, it only managed a 10% market share in the country after one year of operation. These countries have similar market characteristics to Bahrain, which will make it difficult for Viva to acquire more than a 15% market share in its first year. Given the tougher conditions in 2010, a realistic level would be around 10%.