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October 11, 2010

Youth consumer, broadband to drive Saudi Arabia telecom growth: Delta Partners

Smart device, telecom apps, and mobile financial services are other growth factors

By CBR Staff Writer

Growth of the telecom market in Saudi Arabia will be driven by a large youth and expatriate consumer base and a surge in broadband activity, according to telecom advisory and investment firm Delta Partners.

The large youth and expatriate population are currently underserved but offer vast potential if directly targeted, according to a whitepaper released by the firm, which also stated four other factors that will play a key role in the growth of the telecom market in the country.

The whitepaper said that broadband users have grown ten-fold since 2005 and are expected to nearly double from 3.2m users in 2010 to 5.9m users in 2014.

The third factor is the smart device, such as Apple’s Iphone and RIM’s Blackberry, which have caused many consumers to pay more attention to the device rather than to the operator giving competitive advantages to operators with the best line-up.

The fourth factor includes innovative telecom applications and services, as it is expected to reach nearly 40% of total data revenues in 2014. Both the government and regulator can also play an important role by establishing an enabling environment.

Mobile financial services (MFS) is the fifth factor that can place Saudi Arabia at the forefront of mobile commerce in the region through the creation of a standardised and large enough ecosystem that is attractive for all players.

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Corporate need for sophisticated ICT services is the sixth factor, under which telecom operators and vendors will have to deliver solutions for verticals such as networking solutions, cloud services, data centers and Machine-to-Machine (M2M).

According to the white paper, the Saudi Arabian telecom market has seen rapid growth over the last five years to become a $11.6bn industry in 2010 that contributes to around 3% of GDP.

Josep Que, partner of Delta Partners, said that the growth in Saudi Arabia’s telecom market had been solid, with an extra $1bn revenue expected to be added this year – more than all the remaining GCC market growth in 2010 together.

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