Saudi delay of mobile virtual network licence may show lack of interest

Saudi Telecom is partnering with British tycoon Richard Branson’s Virgin to offer MVNO services via its network. Fahad Shadeed / Reuters

The decision by Saudi Arabia’s telecommunications regulator to postpone the award of a mobile virtual network operator (MVNO) licence until December could signal a “lack of interest”, industry analysts say.

On Monday, the Communications and Information Technology Commission (CITC) said it had extended the deadline for the submission of applications for an MVNO licence for Zain, a telecoms operator.

Under the MVNO concept, a company leases capacity on a telecom operator’s network to offer services to a specific market or niche. Oman was the first country in the Middle East to offer MVNOs, followed by Saudi Arabia. MVNOs accounted for about 11.8 per cent of mobile subscriptions in Oman at the end of June, according to Ovum research.

In Saudi Arabia, Saudi Telecom is partnering British tycoon Richard Branson’s Virgin to offer MVNO services via its network.

Mobily, a unit of Etisalat, joined hands with Jawraa Lebara as an MVNO provider. “The postponement suggests that there might not be a great deal of interest in the MVNO licence, as the regulator seems to be giving more time for interested parties to come forward,” said Matthew Reed, Ovum’s practice leader for the Middle East and Africa.

“The Saudi mobile market is already very competitive and I guess there are relatively few players with both the interest and expertise to want to try to get into it as an MVNO at this stage.”

In April last year, CITC cancelled the MVNO licence that a consortium led by the UAE’s Axiom Telecom had won. Since then, uncertainty has loomed around the MVNO hosted on Zain’s network.

Paul Black, the programme director of telecoms and networking for the Middle East and Africa at information technology research firm IDC, reiterated that a new MVNO entrant would struggle to capture market share.

“Although the requests have been made by the tenderers, this delay will make it harder to adapt such a competitive environment for the new MVNO,” he said.

“The prospective MVNO will have the challenges of being a late entrant to a market with three mobile network operators and two MVNOs.”

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