NEW ANALYSIS: Mobile users in many countries in the Middle East are beginning to embrace mobile broadband services, yet a number of markets in the region still lag behind the global average in terms of 3G penetration, according to data from GSMA Intelligence.
While annual growth in mobile broadband1 connections in the region fell from 101% in 2011 to 61% in 2012, levels of mobile broadband penetration (as a percentage of total connections) in some Middle Eastern countries are now eclipsing their Western counterparts. Furthermore, the region now has 17 LTE networks spread across eight countries.
The most advanced markets in the region are Israel, where mobile broadband networks account for 63% of total mobile connections (as of Q2 2013), Turkey (59%), United Arab Emirates (55%) and Saudi Arabia (54%). In contrast, the average for Southern Europe stands at just 45%, while Western Europe has about half its connections on mobile broadband networks and in Northern Europe around three in five connections are mobile broadband.
Turkey has been one of the main mobile broadband growth engines in the region and all three operators in the country benefitted from significant data revenue growth in the year to Q1 2013. Turkcell has been particularly active in marketing data services, with its own-branded range of low-priced smartphones (the “T” series) contributing to a smartphone penetration of 22% at the end of Q1 – some 6.9 million devices. The operator has recently introduced a Turkcell-branded tablet, and is also offering innovative speed-based and shared data plans to further boost data consumption. Subsequently, Turkcell’s data revenue was up some 65% year-on-year to reach $778 million in FY2012-13.
Rival Avea (Turk Telecom) is pursuing a similar strategy. On its Q1 2013 Investor Call the operator’s Chief Marketing Officer Dehsan Erturk stated that “…mobile data revenue is the backbone of our revenue growth. Data revenue now constitutes 14% of total service revenues with a (traffic) growth of 55% on year-over-year basis thanks to smartphone campaigns and unique internet packages, addressing different customer segment user, various device types and data bundles.” The operator ran 40 separate smartphone marketing campaigns during 2012, and had 12 smartphones in its portfolio that were exclusive to Avea, including its own-branded Android handset, the ‘inTouch’. As a result Avea has the highest level of smartphone penetration in the country with 27% in Q1 2013. On the back of this, data revenue increased by some 79% annually to hit $348 million in FY2012-13.
Saudi Arabia is another country in the region that has witnessed rapid growth in data consumption in recent quarters. Second-largest operator Mobily (Etihad Etisalat) announced in January that the volume of mobile data traffic over its network reached 750 TB per day in Q4 2012, compared to 163 TB per day in 2011 and just 85 TB per day in 2010. This is due in large part to the development of its 4G-LTE network, which covered 4,500 sites at the end of last year. Significantly, of the 750 TB average daily data volume carried by Mobily during Q1 2013, more than half (400 TB) went via the 4G network. Data revenue for the operator was up 48% year-on-year in FY2012-13 at $1.85 billion, although this growth was surpassed by market leader STC (Saudi Telecom), which in Q1 2013 reported a 74% increase in data revenue over the year-earlier period. STC also reported that data traffic for Q1 2013 was up 176% year-on-year as a result of the launch of its ‘4G SPEED’ tariffs in the second half of 2012.
But many countries in the region have relatively low mobile broadband penetration, despite having some of the highest levels of overall mobile penetration in the world. In Qatar and Jordan, for example, mobile broadband connections make up just over 22% of total connections, despite the countries having overall mobile penetration of 179% and 148% respectively in Q2 2012. In Qatar, Ooredoo is counting on the increasing uptake of data services, having launched a 4G network in its home market in April; the same applies to Lebanese operators Touch (Zain) and Alfa (OTMT), which both launched 4G services in May despite Lebanon currently having just 7% of its connections on mobile broadband.
The greatest untapped potential for data appears to be Iran – despite having mobile penetration of 139.5%, the region’s most populous country has less than 1% of its connections on mobile broadband networks. This situation has arisen because only one of the country’s six operators, Rightel (Tamin Telecom), has been granted a licence to operate a 3G network; the licence gives them the exclusive right to offer 3G services until September 2014. However, since its launch in February 2012, the operator has struggled to gain a foothold in a market dominated by two big players, MCI (TCI) and MTN Irancell – and as of Q2 2013 has a market share of just 1%.
With 3G and 4G deployments increasing across the region, operators must ensure that they can effectively monetise their network investments in the face of competition from both their rivals and from the OTT messaging services whose popularity will inevitably grow as smartphone penetration increases.
Total mobile penetration and mobile broadband share, selected Middle Eastern countries, Q2 2013
Source: GSMA Intelligence
1 GSMA Intelligence’s definition of mobile broadband includes the following technologies: CDMA2000 1xEV-DO, Rev. A, Rev. B, WCDMA HSPA, TD-SCDMA, LTE, TD-LTE, AXGP, LTE Advanced, TD-LTE Advanced, WiMAX and WiMAX 2.