Security, rivals delay mobile newcomers’ entry in Saudi Arabia
State security requirements and a lack of cooperation from Saudi Arabia’s existing telecom operators have delayed the launch of two new mobile companies until later this year, their chief executives said.
The national telecom regulator, trying to increase competition, instructed the kingdom’s three mobile operators to each host a mobile virtual network operator (MVNO), announcing winning bidders as long ago as June 2013.
Virgin Mobile Middle East and Africa (VMMEA), part-owned by British entrepreneur Richard Branson’s Virgin Group, teamed up with former monopoly Saudi Telecom Company (STC), while Jawraa Lebara partnered with No 2 operator Mobily.
VMMEA in March said it hoped to launch services in the first half of 2014, while Mobily initially said its Jawraa’s launch target was the end of March, yet both have yet to do so.
“Most of the challenges are interconnections with other operators,” Yasser Alobaidan, chief executive of Jawraa, told a conference in Dubai this week.
MVNOs usually pay their host operator a percentage of their revenues plus fees, while also allowing the host to target segments outside their core market. In STC and Mobily’s case, these would probably be Saudi Arabia’s low income foreign workers.
Saudi Arabia has 1.8 mobile subscriptions per person, which means the new firms must likely woo customers from existing operators and that threat could explain their apparent reluctance to cooperate.
YEAR END TARGET
The MVNOs have also faced difficulties meeting the demands of Saudi Arabia’s security apparatus to allow for so-called lawful intercept, Alobaidan and Mikkel Vinter, VMMEA chief executive, told the conference.
“That’s the same for every operator,” said Vinter.
Lawful intercept allows for electronic surveillance of an individual.
“All these factors have to come together, the regulator has to give the final stamp of approval and then we can launch,” said Vinter. “We’re now very close. I’d be very disappointed if it’s not this year.”
Jawraa also aims to launch by year-end, said Alobaidan.
The Communications and Information Technology Commission (CITC), which in April ordered the MVNO licence for No 3 operator Zain Saudi be retendered, did not respond to requests for comment.
STC and Mobily claim 45 and 39 per cent respectively of the kingdom’s mobile subscribers, according to loss-making Zain Saudi, which has 16 per cent after failing to make major inroads into the big two since launching services in 2008.
Yet Alobaidan was bullish for Jawraa’s prospects.
“We want to own 5-10 per cent of total market share within the coming three years,” he said.
Vinter was more cautious on VMMEA, pointing out Oman’s two MVNOs had a combined market share of about 10 percent, with his company claiming the majority.
“It would be fantastic to match that, but Saudi has one more operator than Oman, it’s a fiercer market and there are also new players coming in at the same time,” said Vinter.
“Our business case is fulfilled with a significantly lower number than that. If we could get 10 percent between us in 2-4 years that would be a strong performance.”
Jawraa, 15 per cent owned by London’s Lebara group with the rest held by Saudi investors, also plans to expand abroad.
“We are working on licence papers with Tunisia, we’re working with the regulators in Morocco and Turkey as well as some Gulf markets,” added Alobaidan. –
Security, rivals, mobile, newcomers ,entry , Saudi Arabia