More can mean richer in Saudi mobile world

What's Up: Three "virtual" mobile-phone operators are set to be licensed in Saudi Arabia, marking new opportunities to target niche markets in an increasingly competitive business.

The number of mobile operators in Saudi Arabia is set to double, marking a new growth opportunity in an already competitive market, analysts say.

The kingdom currently has three mobile operators - Saudi Telecom Company (STC), Mobily and Zain Saudi - which are vying for subscribers in an increasingly tough business.

They are set to be joined by three mobile virtual network operators (MVNOs). Such operators do not build or own telecommunications infrastructure but piggyback on existing operators' networks to sell services to consumers.

More competition usually means lower consumer prices.

But analysts said the arrival of the new operators could be a win-win scenario for the new and existing players.

Each of the existing operators is expected to sub-license its network to an MVNO, for which it will receive a fee.

The new players in the industry stand to benefit from targeting specific segments, such as Asian expatriates, or services such as mobile broadband, commentators said.

"There's a substantial opportunity for new business," said Matthew Reed, a senior analyst at Informa Telecoms & Media. "The arrival of the MVNOs … potentially creates opportunities to target market segments that they have not already addressed."

Ibrahim Masood, a director and senior investment officer for asset management at Mashreq, said the move to license more operators in Saudi Arabia was positive.

"This should result in a more differentiated offering," he said. "The only reason why it would be bad news would be if the MVNOs only decided to compete on price."

Jameel Al Molhem, the chief executive of STC's operations in Saudi Arabia, said his company was "available for discussion" with potential MVNO partners.

But he acknowledged that three new contenders would be "a tough challenge" for the country's mobile market.