Saudi Arabia to become Gulf's first wireless society

Kingdom on track to become first wireless society in Gulf, with more residents expected to sign up to mobile broadband than on PCs in coming year.

Mobily has seen its network traffic grow more than 19,000 per cent since May 2007.

Saudi Arabia is on track to become the first wireless society in the Gulf, with more residents expected to sign up to broadband internet on their mobile devices than on personal computers in the next year, analysts say. Simon Simonian, a telecommunications analyst at Shuaa Capital, said in a report that the Saudi telecommunications market will become increasingly competitive this year, with new promotions for mobile broadband devices expected to flood the market.

Mr Simonian said the kingdom's telecoms sector is in a "privileged position" compared with other operators in the Gulf, as the country will continue to benefit from stable population growth, high disposable income and better economic prospects. Mobily executives often say that its mobile broadband network is the busiest mobile data network on the planet, moving 44 terabytes of data every day at the end of last October.

The company's network has seen its daily traffic increase more than 19,000 per cent since May 2007, said Abdulaziz al Tamami, the chief operating officer of Mobily, at a recent conference. The country is increasingly relying on the mobile market to fuel the telecoms sector's growth, Mr Simonian said. Mobile represents about 80 per cent of Saudi Arabia's 52.3 billion riyal (Dh51.2bn) telecoms market and had sales growth of 10 per cent last year.

Mobily users spend an average of 90 riyals each a month on their mobile devices, about 10 per cent less than what UAE telecoms users spend. "Two factors contributed to the mobile segment's double-digit growth," Mr Simonian said. "One, the entry of the third operator Zain KSA; and two, the rapid adoption of mobile broadband services." Saudi Telecom and Mobily, which is part-owned by the UAE's Etisalat, have been the main drivers of the sector's growth.

But since the entry of Zain in August 2008, competition has increased in the Saudi mobile market, with frequent promotions by all players leading to lower monthly plans and a boom in new subscribers. "Telecom operators in Saudi Arabia are focusing on providing broadband to a new wave of subscribers who would like an individual connection, such as on a personal mobile SIM," said Kunal Bujaj, a telecoms analyst at HSBC, in a recent report.

"In the same way that cheap handsets increased mobile SIM penetration in the first half of this decade, we expect low-cost PCs to drive multiple broadband connectivity within households in emerging markets." [e-mail]