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 [1].

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

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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.

[1] http://www.gsmaintelligence.com
[2] https://www.mobileworldlive.com/wp-content/uploads/2013/07/Mobpen.png

LIVE FROM GSMA MOBILE WORLD CONGRESS AMERICAS 2018: The launch of 5G services will offer limited price upside compared to early 4G launches, GSMA Intelligence research director Pablo Iacopino (pictured) warned, as he urged operators to use the new network technology to offer a wider range of services.

Speaking at the GSMA Intelligence Americas Summit, Iacopino noted 5G was set to launch faster across many markets than the majority of the mooted services expected to drive future revenues.

“Immersive reality [for example] is far from an acceptable user experience,” he said. “The challenge for operators is to monetise 5G from the consumer segment, as faster speed on its own has minimal price uplift.”

He went on to note the increase in consumer prices following the launch of 4G was short-lived, especially in markets where launch prices for 4G were much higher than existing 3G services.

“4G will pay the bills for the next ten years which means 4G will account for the lion’s share of operator revenues,” he added.

The analyst noted operators should avoid selling 5G as a consumer proposition in its own, as it was unlikely to be a compelling offer. Instead, he recommended linking it to other products and services.

Potential technologies Iacopino expects to be supported (and potentially sold alongside 5G) include: IoT, 8K television, immersive reality, artificial intelligence and advanced gaming.

LIVE FROM GSMA MOBILE 360 MENA, DUBAI: GSMA Intelligence (GSMAi) noted while 5G launches are making headlines on a regular basis, the technology would likely remain a long-term play in Middle East and North Africa (MENA), with 4G tipped to continue growing over the next few years.

In its The Mobile Economy: Middle East and North Africa 2019 report, the GSMA’s analyst arm noted 4G would surpass 3G as the region’s most-dominant technology in 2021 and maintain this position for the foreseeable future.

The technology became the region’s second-most used earlier this year when it surpassed 2G, leaving it behind only 3G in terms of prominance. In the report, GSMAi wrote adoption of 4G is being “driven by coverage expansion and operator efforts to migrate 2G and 3G users” to the later technology.

“However, device affordability remains a concern for many consumers in low-income brackets,” the analyst group warned.

By 2025, 4G is expected to account for just over half (52 per cent) of the region’s 722 million mobile connections, up from around a third in 2019.

In contrast, there are expected to be 45 million 5G connections across the region at the same point, accounting for 6 per cent of total mobile connections.

[1]GSMAi noted the majority of 5G launches in MENA are still a few years away, although coverage will rise steadily in the period to 2025 (see image left, click to enlarge).

To date, all 5G launches in MENA have taken place in five GCC (Gulf Cooperation Council) Arab States (twelve operator launches in total across Bahrain, Kuwait, Qatar, Saudi Arabia and the UAE).

“The 2020s will see 5G activities become more widespread across the region, with trials and commercial launches expected in non-GCC countries,” particularly Egypt, Morocco and Turkey, the research group added.

[1] https://www.mobileworldlive.com/wp-content/uploads/2019/11/5g-launches-MENA2.jpg

LIVE FROM GSMA MOBILE WORLD CONGRESS AMERICAS 2018: Striking partnerships for IoT launches and moves into vertical markets could restrict the long-term benefits from successful ventures, Verizon Connect SVP product strategy Jason Koch (pictured) warned, adding acquisition of companies already in the sector could potentially be a more lucrative strategy.

Koch, whose former company was one of several bought by the operator to form what is now the Verizon Connect telematics division, said although acquisition may be a better route to success in the IoT ecosystem, it was also a more challenging one.

“It’s easy to partner with a third party to bring a solution to market, you just give up a bunch of the value capture when you do it,” he said. “You also give up the future value that you may not understand what it is today – especially with software and technology that changes so quickly, you don’t really know what you have at this moment.”

Speaking at the GSMA Intelligence Americas Summit on the eve of Mobile World Congress Americas, the executive said when assessing acquisition targets, it was important to bring in those with a “full stack” solution in place rather than just the infrastructure.

He also warned operators that building solutions themselves may prove problematic.

“You see it all the time,” he noted. “Companies think they have a core competency so they try and build something. After they try, and sometimes fail, they think maybe that wasn’t their core competency so they partner with somebody.”

Koch concluded: “Every company has to pick their own strategy based on time to market, known quantity, established business case. The easiest decision and lowest risk decision is to go partner, it’s not always the best long term strategy.”

LIVE FROM GSMA MOBILE WORLD CONGRESS AMERICAS 2018: GSMA Intelligence is touting its latest set of megatrends tipped to shape the industry to 2025, and it’s no surprise to see 5G dominating the list.

The analyst house predicts 5G will account for about 15 per cent of global mobile connections by 2025, but will be driven by only a handful of markets: China, Japan, South Korea and the US. Europe could be a 5G leader too, but only if spectrum availability and fragmentation issues are resolved.

And the 5G opportunity is shifting to the enterprise: “5G and IoT will open up new opportunities in a range of enterprise sectors, and an additional 10 billion industrial IoT connections will be made between now and 2025,” GSMA Intelligence noted in the report. “This will also drive a shift to decentralised and edge computing, which will bring telcos and cloud players (particularly Amazon and Microsoft) into a mix of competition and partnership in servicing the vast range of enterprise sectors, overhauling operations with advanced connectivity and analytics.”

Mobile first
Other areas of note include a claim that the next generation of internet users will be mobile only. By 2025, 3.7 billion people (72 per cent of the global internet base) will be accessing the internet exclusively via mobile. Around half of new users coming online over this period will come from just five markets: China, India, Indonesia, Nigeria and Pakistan.

GSMA Intelligence also believes connectivity will be commoditised in the IoT era. Providing connectivity will account for only around 5 per cent of the global IoT revenue opportunity by 2025 ($51 billion). The vast majority of growth, it argues, will come from the applications, platforms and services layer, which will account for more than two-thirds of IoT revenue ($754 billion).

Content strategy
In light of the fact content is a very expensive game to play in, the analyst company believes partnering or licensing content is a more realistic prospect for operators than acquiring or creating their own content. Given that Netflix spent $6.3 billion on original programming in 2017, not far behind Time Warner ($8 billion), Fox ($8 billion) and Disney ($7.8 billion), few are likely to argue with this advice.

Finally, the data experts argue that volume growth is clearer than revenue growth. An additional 16 billion IoT connections (industrial and consumer) will be added by 2025, alongside ongoing 4G and 5G connections growth. However, until fresh revenue streams are unlocked in these new areas, GSMA Intelligence believes the revenue outlook for operators is modest. Global mobile revenues topped $1 trillion in 2017, but revenue growth is likely to stay at around 1 per cent a year in the period out to 2025.

LIVE FROM GSMA MOBILE WORLD CONGRESS AMERICAS 2018: North America will dominate global 5G take-up by 2025, with around 200 million connections in the USA and Canada representing 49 per cent of the region’s projected total mobile market by that point, the GSMA predicted.

A new Mobile Economy report from the Association forecast North America will be significantly ahead of Europe (30 per cent) and key Asian markets including China, Japan and South Korea (30 per cent, aggregate). The 200 million milestone will be double a forecast of 100 million connections expected to be hit in late 2022.

The findings reflect the progress the US, in particular, is making in 5G, with operators AT&T [1] and Verizon [2] expected to launch commercial networks this year, the first in the world. Operators in Canada are tipped to launch 5G in 2020.

Between 2018 and 2020, mobile operators will invest $122 billion in capex in North America, mostly driven by network maintenance and early 5G rollouts which are likely to require densification through small cell deployments, new antennas and transmission upgrades.

The Association also found that the number of unique mobile subscribers in North America exceeded 300 million in 2017, representing 84 per cent of the population and the second-highest subscriber penetration rate globally behind Europe. The subscriber base is forecast to increase to 328 million by 2025, lifting the penetration rate to 86 per cent.

Meanwhile the number of IoT connections in North America is forecast to almost triple between 2018 and 2025, reaching almost 6 billion.

Economic contribution
This growth is also resulting in a strengthened contribution to the region’s economy. By 2022, the mobile industry’s economic contribution is expected to increase 32 per cent to $1.1 trillion, or 4.9 per cent of GDP, up from $833 billion (4 per cent of GDP) in 2017, driven by increased productivity and the ongoing digitisation of industry and services.

North America’s mobile ecosystem also supported nearly 2.4 million jobs in 2017 and was responsible for $114 billion in public sector funding via general taxation (not including funds raised by spectrum auctions).

High subscriber penetration coupled with historically high consumer spend on mobile services means the mobile market in North America generated $260 billion in revenue in 2017. The US is the largest market worldwide in terms of revenue, about 40 per cent greater than China; bigger than the entire European mobile market; and larger than CIS, Latin America, MENA and Sub-Saharan Africa combined.

[1] https://www.mobileworldlive.com/featured-content/home-banner/att-names-cities-and-vendors-as-5g-plan-progresses/
[2] https://www.mobileworldlive.com/featured-content/home-banner/us-players-set-5g-battle-lines-for-mwca-showdown/

LIVE FROM MOBILE 360 MENA, DUBAI: IoT connections in the Middle East and North Africa (MENA) region experienced a growth rate second only to Asia Pacific, with a CAGR of 16 per cent expected to boost connections from 396 million in 2018 to 1.1 billion in 2025.

A new GSMA Intelligence (GSMAi) report, Realising the potential of IoT in MENA, shows initiatives from governments and the mobile industry are expected to be fundamental in helping IoT revenues reach $55 billion by 2025, an annual growth rate of 19 per cent.

“The commitment to, and innovation in, IoT seen across MENA is also expected to benefit the GDP of the regional economy to the tune of $18 billion in 2025,” up from $8.5 billion in 2018, GSMAi wrote in the report.

[1]In 2019, the consumer and industrial IoT segments have taken equal shares of total IoT connections (see chart left, click to enlarge), but industrial IoT is where most of the growth will occur, reaching 57 per cent of total connections by 2025, driven by an increase in smart utilities, retail and city deployments.

While IoT in the region is still nascent, the analyst group noted its share of global IoT revenues is approaching 6 per cent, significantly ahead of its economic share of GDP, which is just under 4 per cent.

Operators need to generate IoT revenue
The research also highlighted the need for operators to step-up to the task ahead and move beyond just a connectivity role.

“To take a greater share of the IoT revenue opportunity, operators need to move beyond connectivity into strategic partnerships with ecosystem players and even governments to launch new value-added services.”

GSMAi highlighted a number of recent successful operator-led partnerships between carriers and third parties, including Etisalat UAE’s smart fire alarm solution Hassantuk for Homes via a deal with the Ministry of Interior, and operator du and healthcare incubation platform company OLEA showcasing a number of smart health devices.

[1] https://www.mobileworldlive.com/wp-content/uploads/2019/11/iot-mena2.jpg

LIVE FROM GSMA MOBILE 360 MENA, DUBAI: GSMA Intelligence (GSMAi) noted while 5G launches are making headlines on a regular basis, the technology would likely remain a long-term play in Middle East and North Africa (MENA), with 4G tipped to continue growing over the next few years.

In its The Mobile Economy: Middle East and North Africa 2019 report, the GSMA’s analyst arm noted 4G would surpass 3G as the region’s most-dominant technology in 2021 and maintain this position for the foreseeable future.

The technology became the region’s second-most used earlier this year when it surpassed 2G, leaving it behind only 3G in terms of prominance. In the report, GSMAi wrote adoption of 4G is being “driven by coverage expansion and operator efforts to migrate 2G and 3G users” to the later technology.

“However, device affordability remains a concern for many consumers in low-income brackets,” the analyst group warned.

By 2025, 4G is expected to account for just over half (52 per cent) of the region’s 722 million mobile connections, up from around a third in 2019.

In contrast, there are expected to be 45 million 5G connections across the region at the same point, accounting for 6 per cent of total mobile connections.

[1]GSMAi noted the majority of 5G launches in MENA are still a few years away, although coverage will rise steadily in the period to 2025 (see image left, click to enlarge).

To date, all 5G launches in MENA have taken place in five GCC (Gulf Cooperation Council) Arab States (twelve operator launches in total across Bahrain, Kuwait, Qatar, Saudi Arabia and the UAE).

“The 2020s will see 5G activities become more widespread across the region, with trials and commercial launches expected in non-GCC countries,” particularly Egypt, Morocco and Turkey, the research group added.

[1] https://www.mobileworldlive.com/wp-content/uploads/2019/11/5g-launches-MENA2.jpg