Saudi Arabia may be the biggest telecommunications market in the Middle East but the kingdom needs to foster an ecosystem to bring all industry players closer together, a new report says. Worth about US$11.6 billion (Dh42.6bn), the Saudi telecoms market is expected to grow by another $1bn this year, more than the rest of the Gulf's telecoms markets put together. But several points need to be addressed to fully realise the potential of the telecoms market in the kingdom, says a report issued this week by Delta Partners, a telecoms consultancy based in Dubai.
Factors include managing a burgeoning youth demographic coupled with a surging appetite for robust broadband and mobile services. "With the forecast growth of broadband and the increasing proliferation of smart[phone] devices, there is an opportunity for players across the telecoms value chain to fill the gap with products and services that meet the Saudi customers' needs," said Josep Que, a partner at Delta Partners.
The Delta report points to the telecoms applications and services sector as the main area of opportunity in the kingdom. While most mobile subscribers rely on text messaging-related services, an influx of newer handsets such as the iPhone and the Samsung Galaxy have helped to drive the applications growth in Saudi Arabia. That has become a highly lucrative revenue stream for mobile operators. The proportion of data revenues such value-added services make up is estimated to increase to 38 per cent in 2014 from 25 per cent this year, Mr Que said.
He said mobile operators needed to be "bold and decisive" when providing innovative applications and services. "Mobile operators increasingly need to consider opportunities enabling them to go to market with applications and content services that are accessible by other operators' subscribers, not just their own network of subscribers," Mr Que said. "This increases the size of the revenue pie for both operators and content players."
Content will remain an issue as well and more investment must be made in leveraging online partnerships to increase the reach of Arabic video and music, he said. Mr Que said the Saudi Arabian government would also play a vital part in creating an "enabling" environment for all these sectors to thrive in. "This needs to include an appropriate legal framework, such as content rights; and foster innovation of applications including local content, possibly through the creation of incubators and incentive programmes," he said.
