Virgin Mobile to launch telecom services in H1 2014 in Saudi Arabia

Virgin Mobile Middle East & Africa is planning to launch telecom services in Saudi Arabia in the first half of 2014.

On Saturday, Virgin Mobile Middle East & Africa, part-owned by British entrepreneur Richard Branson’s Virgin Group, received mobile virtual network operator (MVNO) licenses in the kingdom along with two other operators.

Earlier, the telecom regulator Communication and Information Technology Commission (CITC) told Saudi’s 3 mobile operators – Saudi Telecom Co (STC), Mobily and Zain Saudi – to each host an MVNO in a move aimed at increasing competition. STC has teamed up with VMMEA, Mobily with London’s Lebara Group and Zain Saudi with Gulf retailer Axiom.

The launch of MVNO services will be revolutionary for the Saudi Arabian telecom market, Reuters reported. Zain Saudi’s launch in 2008 was the last major change to Saudi’s mobile sector.

In January, Mobily told Reuters it hoped Lebara would begin services in the first quarter of 2014.

Virgin Mobile spreads wings

According to analyst reports, in 2013 mobile subscribers actually declined in Saudi Arabia due to a crackdown on the number of illegal immigrant workers in the country along with new restrictions on the number of pilgrim workers allowed. Phone registration regulations have also been tightened and as a result mobile subs dropped to 51 million at the end of 2013, compared to around 53 million in 2012.

Telecom analysts warned that the traditional voice market would take a breather in terms of growth in subscriber base/penetration. However, there is still room for penetration to increase beyond 200.0 percent. This can be attributed to the potential for use of multiple SIMs by low-income Saudis and expatriates.

IMF expects KSA’s population to grow 2.2 percent-2.5 percent during 2011-2016, which would add 7.9 million new subscribers by 2014. Consequently, mobile penetration in KSA will reach 211.0 percent in 2014 after increasing to 209.0 percent in 2013. Active penetration rate will increase to 175.4 percent and 177.1 percent in 2013 and 2014, respectively, Al Jazira Capital said in a May 2012 note.

“We expect the 3G subscriber base to increase at a CAGR of 14.6 percent to 27.7 million during 2011–16. On the other hand, growth in the 4G subscriber base is expected to accelerate post 2013; it is expected to expand at a CAGR of 51.3 percent to 11.8 million during 2013–16. Accordingly, we expect 3G and 4G penetration in Saudi Arabia at 87.7 percent and 37.5 percent, respectively, by 2016,” the note said.

Data revenue as percentage of total revenues for Saudi Arabia will increase to 25 percent in 2014.

LTE in Saudi Arabia is expected to reach 12.5 percent of all subscriptions in KSA by 2015 against 3.4 percent in 2012.

According to Saudi Arabia’s economy minister, investments in the telecom sector would reach around SAR37 billion in 2013 and SAR50 billion in 2015.

Baburajan K
editor@telecomlead.com