Mobile data traffic soars in the Middle East, Finds New Report

Mobile penetration levels are high in the Middle East, having passed the 100% milestone in 9 out of 14 countries – the highest rates can be found in the Gulf Cooperation Council (GCC) nations, where penetration rates range between 170% and 200% (except Iraq, which is still below 100% mobile penetration).

The saturated market is creating an environment where it is increasingly harder for operators to grow mobile voice revenue. In addition, the rise of Over-The-Top (OTT) service providers and introduction of MVNOs in some markets is creating increased competition for existing operators. To address these challenges, operators are trying different strategies such as moving into fixed services, expanding into other countries, improving mobile packages or focusing on mobile broadband services. In 2014, the region was the fastest growing globally in terms of mobile data traffic, and strong growth rates are expected to continue in the coming years.

While the region has matured in terms of mobile subscriber penetration, this tech-savvy population has been quick to embrace smart phones, creating one of the hottest markets for smart phone growth worldwide.

Looking at some of the countries individually, we can see that while Bahrain possesses the smallest market in the Middle East, its telecoms industry is arguably one the most developed. Early to introduce liberalisation, it is one of the most open markets in the region, underpinned by a relatively well-developed regulatory environment.

Iran’s telecoms market is the second largest in the Middle East (after Turkey), given the size of its population. Mobile services are widely available from six mobile network operators, three of which offer services on a national basis. Since the start of competition, Iran has seen a huge growth in mobile subscriber numbers and vast improvements in its mobile market, which was previously characterised by a severe level of unmet demand for services. Penetration levels indicate room for continued revenue growth.

Mobile services have been a big success story in post-war Iraq, with mobile operators emerging as the star performers in the telecoms sector, given the speed at which their networks could be deployed. The market has grown rapidly, partly due to the lack of fixed-line service. Mobile data services are becoming an increasingly important source of new revenue given the maturing mobile voice market. With smart phone becoming more affordable and mobile data networks in place, the focus is shifting to mobile internet offerings.

Israel possesses an extremely competitive market served by five mobile network operators as well as by a number of Mobile Virtual Network Operators (MVNOs). Strong competition has led operators to focus on costs, resulting in a number of infrastructure sharing agreements. Factors that have helped drive competition include full mobile number portability and regulatory barriers that prevent operators from linking sales of handsets to services, or offering discounts to customers that commit to longer periods.

An important showcase of the Middle East’s emerging ICT sector, Jordan boasts a burgeoning technology start-up industry and a modern liberalised telecoms market. All three mobile network operators have launched 3G/HSPA networks, driving rapid growth in mobile broadband subscriptions, and Zain, one of the region’s leading mobile players, launched the country’s first LTE network in February 2015. However, the country’s operating context is being challenged by the conflict in neighbouring Syria.

Kuwait possesses a competitive mobile market shared by three mobile network operators. With voice penetration reaching saturation levels, mobile broadband offers the best revenue growth opportunity for mobile operators, supported by the launch of 3G/HSPA/LTE networks.

Lebanon holds a unique position in the Middle East’s telecoms industry given the continued high level of government ownership. While most fixed line incumbents in the region are government owned, Lebanese government ownership extends to the country’s two mobile operators. Several unsuccessful privatisation attempts have been made, with auction dates scheduled and then postponed. The fact is, market liberalisation and privatisation are contentious issues, as revenue from the telecoms industry contributes to a significant proportion of the government’s budget.

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