The Bahrain Telecommunications Company was established in 1981 as the sole communications service provider in the country. The operator is mostly owned (directly or indirectly) by the Bahraini government with a total of 77 percent (more than 50 percent shared between Mumtalakat holding company and the social insurance organization).
However, the telecommunications regulatory authority (TRA) and as part of the national telecommunications plan (NTP) has decided to liberalize the telecom market in the kingdom, which paved the way to a newly established rivalry between Batelco and two other major players in the region who willingly exploited this opportunity, the Kuwaiti operator Zain and the Saudi giant STC. Batelco has also recently lost its broadband segment after a legal separation lead to the formation of the Bahrain national broadband network (BNET). The separation aims at improving internet service provision and increase competitiveness in the market by opening the door for internet service providers (ISPs) to enter the market.
This separation is also a core part of the fourth NTP which mandates “Ubiquitous ultrafast broadband, …, that is supported through the deployment of a national fiber network, to which all retail service providers will have access on an equal, fair, reasonable and non-discriminatory basis, so as to allow competition to flourish in the provision of communications services, applications and online content”. It also clearly mentions that “this single network will be owned by a separate legal entity, which shall be legally and functionally separated from the Incumbent Operator, Bahrain Telecommunications Company (Batelco)”.
Fierce Local Competition and Strong International Presence
The healthy competition in the Bahraini market has led to a relatively fast evolution of the telecom sector in the Kingdom, largely contributing to the established 2030 economic vision. The fruits of the liberalization strategy, which targets increased competitiveness and fairness, concretized with Bahrain being ranked fourth by the international telecommunications union (ITU) in terms of the telecommunications infrastructure index (TII).
The TII index combines five sub-indicators including mobile and fixed broadband subscription as well as fixed telephone lines, internet users and mobile subscriptions. Therefore, the rank achieved by the country clearly highlights the efforts being made to improve all telecom segments.
The dominance that Batelco enjoyed in the local market has been notably threatened by the two other operators. These operators are not new entities trying to learn, but rather valuable brands willing to apply their vast experience operating in external markets, notably to the Bahraini one. In the latest TRA report, it can be clearly seen that Batelco and STC share the leadership in the mobile market with 36 percent of the total share, STC having a slight edge in the postpaid market.
Batelco is the undeniable leader in the fixed telephony services as well as fixed broadband subscriptions. STC leads the way in mobile broadband subscriptions. Machine to machine (M2M) is another contested area with Zain largely leading in the number of subscriptions, but severely lagging in the M2M traffic with Batelco keeping the leadership with around 14 GB generated in the last quarter of 2021.
Batelco also has the best voice quality of service (QoS) across the country as well as the highest 5G download and upload speeds as per the latest TRA quality of mobile services report. At the end of 2021, Batelco reported a 16 percent increase in net profits, a 3 percent increase in revenues and a 10 percent increase in operating profits. The financial results for the first three months of 2022 indicated a 9 percent decrease in net profit compared to the same quarter in 2021. Revenues also dropped by 1 percent. The decreasing number have been attributed to the release of new digital brands and the COVID-19 impact in its external markets.
The international operations have been very important for the group with a contribution to the revenues amounting to 54 percent in Q1 of 2022, a one percent increase from the same period in 2021.
In fact, the company’s presence goes beyond the Kingdom’s borders to several external markets to Jordan, the Maldives, the Channel Islands (including Guernsey, Jersey, and the Isle of Man), and Yemen. Jordan’s affiliate Umniah is the third operator with a 25 percent share compared to 44 percent for Zain. It also accounts to 20 percent of the revenues. Dhiraagu is the leading operator in the Maldives generating 21 percent of the group’s revenues.
Finally, Sure is the leading operator in the islands with 12 percent shares in the revenues. Batelco also has minor shares in Yemen’s Sabafon. It has even entered the Egyptian market very recently through its digital solution service Beyon Connect.
Batelco and the Fifth National Telecommunications Plan
The global telecom landscape in general and the GCC-related one in particular has been governed by digital transformation endeavors incorporated in the countries’ 2030 visions. As a result, the hyped headlines for major operators in the region such as E&, STC, Zain, Ooredoo, and Batelco have included cybersecurity, cloud computing, internet of things, digitization, and sustainability, among others. The three services launched by Batelco earlier this year is a testimonial of this strategy with Beyon Solutions, Cyber, and Connect offering several security and digital services and solutions to the private and public sectors. This comes shortly after the introduction of the Beyon Money app which takes Batelco into the FinTech world through the provision of digital financial solutions to their customers.
Batelco’s future plan of action will most certainly be shaped by the fifth NTP which is currently being implemented. This plan stresses on the importance of having a solid telecom infrastructure mainly to support information and communications technology services. The fiber broadband network as well as the 5G network should be constantly upgraded. The report reiterates the separate operations between Batelco and BNET. In particular, BNET is being constantly monitored to ensure fairness in service delivery with other licensed operators (OLOs).
The next mobile connectivity phase is expected to be targeting IoT and M2M applications. Although licenses will not be given to new network operators, virtual network operator licenses can be granted for the provision of M2M/IoT services. Cost-cutting through site sharing among network operators and resilience towards future challenges are two other objectives outlined in the NTP. Therefore, Batelco is in for an increased competition from rival operators and potential new entrants in the Bahraini market.
The country’s strategy which consists of welcoming external investments, promoting competition, and setting high QoS standards, increases the pressure on the leading operator to maintain its position. In a sector where the number of players and business opportunities is ever increasing, Batelco faces an uphill task. Governmental backing will effectively remain an asset, but other network operators are backed by big groups with considerable spending power as well.
The drive for innovation, fairness and competitiveness has rendered the Bahraini telecom market an exciting one. The leading position of Batelco has been put under incremental pressure lately. The liberalization philosophy which introduced two operators, and the aggressive national telecommunications plan have transformed the monopolizing system into an evolving oligopoly. Services and quality are two defining factors of the competition. External markets remain a breathing space for the group, offering an additional and welcomed source of revenue.
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China Welcomes a Fourth 5G Telecom Provider
China is one of the largest countries around the world. Together with India, it accounts for about one third of the world’s population and two thirds of Asia’s population. The country has been enjoying steady economic growth with a gross domestic product (GDP) increase of about 10 percent each year according the World Bank. However, the last few years witnessed a slowdown in GDP growth with estimated 5 percent in 2022. The coronavirus pandemic and several challenges contributed to the slowdown. As in other countries, 5G seen as an opportunity for economic growth. In contrast to neighboring India which should see the new fifth generation later this year, Chinese operators have deployed the latest technology three years ago. A few days ago, telcos has welcomed the fourth 5G provider, namely China Broadnet.
Telecommunications in China
The telco landscape in mainland China has been dominated by three operators, China Mobile, China Telecom and China Unicom. China Mobile is undoubtedly the largest operator in the country with a number of subscribers nearly three times that of China Telecom and Unicom. Given the political system in the country, the three operators are backed by the Government of China. The sector is regulated by the ministry of Industry and Information Technology (MIIT).
The strength of the telecom sector in the country is not limited to the service provided in the country, but also to the presence of operators and vendors outside the country as well. China Mobile has a presence in Hong Kong, Pakistan, the United Kingdom, and Singapore. China Telecom has two subsidiaries for the European and American markets. China Unicom has a subsidiary named China Unicom Global Limited which has been established to cover telecom markets outside China. Vendors and original equipment manufacturers have also been dominating telecom markets outside the country. Despite the US. sanctions and the talks about intellectual property infringements, these companies have used their aggressive pricing strategy to get into the ecosystem of most countries around the world. Huawei, ZTE, and some lesser known brands have rivalled with the likes of Ericsson and Nokia. Their phone segments have also become popular with their offerings which provide the best value for money. In countries where notable economic difficulties, Chinese brands are the best sellers.
The Chinese 5G Landscape
The large Asian country has been unsurprisingly one of the early adopters of the latest wireless evolution. The Chinese market is huge and full of opportunities compared to other markets. According to spokesmen from the MIIT, all cities and around 90 percent of the rural areas have 5G coverage in the country. This is higher than 5G coverage in the USA for example. The number of 5G cell-sites is also expected to reach the two million mark by the end of 2022. The investments by telecom operators is expected to be around Yuan 1.2 trillion which is about USD 179 billion. The investments are not only in the infrastructure but in advanced technologies that will help the operators unlock the full potential of the 5G evolution. Earlier in May, Huawei and China Telecom announced their super time-frequency folding technology, which in simple terms, combines the merits of time and frequency division duplexing (TDD and FDD) to achieve high uplink and downlink data rates while reducing the perceived latency as much as possible. This will allow to meet the requirements for ultra-reliable low latency communications (URLLC) use cases in the future.
The 5G network has been gradually deployed in the country between the second half of 2019 and early 2020. While the pandemic has had an impact on the different plans in the country, the different activities related to the telecom infrastructure hasn’t been affected much. The initial deployment was in the n41 band (2.6GHz) for China Mobile and the n78 band (3.5GHz) for China Telecom and Unicom. To extend coverage, the low sub-1GHz bands are being planned for better coverage. As a noteworthy example, China Telecom and Unicom are co-building the 5G network, with cost-saving in sight.
China Broadnet as a Fourth 5G Provider
At the end of June 2022, a fourth operator has started providing services and potentially compete with the other three operators. Named China Broadnet, the new entrant started offering 4G and 5G services to customers.
The announcement was important for two reasons. Firstly, China Broadnet strategically decided to operate in the 80 MHz bandwidth its mother company China broadcasting network (CBN) acquired in the 700 MHz golden band in 2019. The new operator also owns spectrum in the 4.9 GHz band (n79) which it may use as well. The second notable event is that China Broadnet is cooperating with the leading operator to deploy its network and will probably rely first partially on its partner operator’s network. The agreement which spans multiple years allows the new entrant a paid access to the leading operator’s network notably in the 2.6GHz band. The new operator also chose ZTE as a partner to build the new infrastructure.
In a sense, the Chinese telcos has organized themselves into two groups, China Mobile and Broadnet are collaborating to integrate the new entrant into the ecosystem. The bands acquired by Broadnet and the already existing bands that China Mobile uses should provide some nice future insights for the partnership given the wide spectrum availability when combining all the bands. On the other side, the remaining two operators are working on their own 5G network.
Despite all the controversy surrounding Chinese operators and vendors, and the persistent political tensions with the USA and other European countries, the telecom market in China remains a prosperous, interesting, and unique model. The advent of the fourth operator with all telco politics surrounding it shouldn’t cause a major impact directly. The partnership with China Mobile and the gradual rollout of the network promises a change in the competition dynamics in the near future, notably if China Broadnet can deliver unique services that can set it apart from its competitors.
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Telecommunications in Jordan: When External Players and a Promising Strategy Are Driving the Sector Forward
Telecommunications in the Hashemite Kingdom of Jordan is a flourishing market that is continuously evolving with time. The “ICT facts and opportunities in Jordan” report by the telecommunications regulatory commission (TRC) estimates that information and communications technology (ICT) accounts to 3.8 percent of the country’s gross domestic product (GDP), while a recent report by Global Data estimates that the telecom market size value was about USD 1.1 billion with a compounded annual growth rate (CAGR) of 7 percent.
For a total population of around 10.3 million, the TRC has lately indicated in a newsletter early June 2022, that the number of mobile subscribers is around 7.3 million among which, 5.4 million are using prepaid cards. In comparison, fixed line subscriptions totaled around 268 thousand lines.
The ICT sector is identified among the sectoral clusters for growth in Jordan’s vision 2025. The targets in this cluster include the completion of a high-speed fiber optic network, the regulation of the ICT sector and facilitating the licensing to telecom companies, encouraging infrastructure sharing to increase the spread and use of technology in the kingdom. These guidelines somehow provide clues of the strategies followed by governmental and regulatory entities, and operators in advancing the telecom sector in the kingdom
External Operators as a Driving Force
The Jordanian territory is an arena that is witnessing the battle between three international telecom companies, Orange, Zain and Batelco.
Orange Jordan is operating based on the license granted to Jordan Telecom. Previously known as MobileCom, the company has been providing mobile services for more than 20 years in the Kingdom. Orange’s share of the local market 30 to 25 percent as per the latest annual report whereas the fixed segment share exceeds 90 percent. The company reports an increase in revenues by 5.2 percent compared to 2020. The operator also reported an increase in operational and capital expenditures. Fixed telephony and internet services constitute that largest contributor to the company’s revenues followed closely by the mobile segment. Renewable energy projects and digital financial services complete the series. As is currently the trend with most operators, Orange has a future vision of becoming a digital leader by strengthening its infrastructure and diversifying its services, in particular B2B services. The group’s vision takes into consideration sustainability commitments and notable social involvement.
The main competitor to Orange is Zain. The Jordanian branch of the Kuwaiti group replaced the previous Jordanian operator Fastlink in 2002 as part of its regional expansion strategy. The Jordan market constitutes around 7 percent or the total group’s subscriber base and contributing to 9 percent of the total revenues. The capital expenditures in the country constitute 5 percent of the total expenditures. A notable portion of the expenses were towards the renewal of the 900 MHz license for another 15 years. The highlights of this year were the expansion of the deployed 4G, and FTTH networks. According to the investor presentation summarizing the achievements of the first quarter in 2022, the FTTH base witnessed over 42 percent increase and over 34 percent increase in revenue. Akin to Orange, Zain Jordan worked on its B2B services and expand the financial services offered through its Zain Cash platform. Finally, and as part of the group’s strategy to streamline its operations, Zain Jordan has finalized its agreement with TASC towers for the sell and leaseback of its 2607 towers in the Kingdom.
The latest entrant to the local market has been Batelco with its local brand Umniah, which translates to the word “wish” in English. Akin to its competitors, Umniah provides the full spectrum of services including 4G services, fiber to the home connections and fintech solutions through its UWallet subsidiary. Umniah has also been among the first operators in the world to shut down its 2G network. Although it does not have the subscriber base of Zain or Orange, Umniah is evolving very fast.
The regulatory authority in Jordan has also set the guidelines for the establishment of mobile virtual network operators (MVNO), Virgin mobile owned Friendi has been operating in Jordan until 2017 where it decided to suspend its operations due to the losses it incurred. Friendi is in particular still operating in Oman along many other MVNOs.
What is Coming Next?
The current features of the Jordanian market include the advanced 4G and FTTH networks. The TRC is gearing towards the launch of 5G services with all the dilemmas surrounding it, in the Kingdom. Experiments and trials are well underway over mid-band 5G frequencies, notably 3640-3700 MHz and 3740-3800 MHz. The aim of the of the new technology is twofold: improving the quality of the telecom network, and enable advanced services, notably the digitalization of the operations in various profitable sectors.
The TRC has also presented its strategy in its latest annual report. Among others, focus in the coming years will be on increasing internet of things applications, strengthening the security of the telecom infrastructure and enforce advanced cybersecurity practices, and finally open the market to more competitors while reducing the possibility of an operator monopolizing the market. In the upcoming years, Jordan will experience what other countries in the region are currently doing, a wave of digital transformation, increased smartification, and a push to deploy advanced 5G networks. Advanced 5G services will coexist with a strong fiber base, strengthening the available telecom infrastructure.
Although the adoption of mobile and internet services is good, it can be much better. The introduction of new technologies to the Kingdom and the improvement of the ICT sector as per Vision 2025 will take adoption numbers up to the global norm.
Jordan has long been a promising destination for telecom operator. To this end, world players has been investing in developing the underlying infrastructure for around 20 years. The country has been the playground for strong telecom companies including Orange, Zain and Batelco. The strategy of the TRC, along with the investments of the telecom operators is driving the sector forward especially after the coronavirus pandemic which affected economies all around the world. The prospects for the sectors are certainly looking promising for the coming years.
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Egypt’s Telecommunications Market: New Strategies to Come Out of Hibernation?
Digital transformation has become a central topic in the strategic plan of most countries around the world. The progress that has been achieved in different areas of technology has mandated a complete restructuring of different sectors that contribute to the country’s gross domestic product (GDP). Digital transformation is only a fancy moniker to highlight the digitalization that affected various operations, mainly to reduce costs, simplify management, and develop new use cases that increase the profitability of key contributing sectors.
Egypt is among the countries that embraced the transformational wave given the importance of the information and communication technology (ICT) sector which contributed to 5 percent of the GDP in the fiscal year 2020/2021. As a result, the ministry of communications and information technology (MCIT) has pinned high hopes on its “Digital Egypt” strategy which aims at creating a digital society. The telecom industry is among the focus areas towards meeting the strategy goals with the MCIT aiming to improve the quality of infrastructure, extend service provision to villages, and invest in the fiber network.
Current Operator Landscape
The telecom operations in Egypt date all the way back to the 1800s with telegraph services. The mother company, Telecom Egypt, has enjoyed its place as the sole communications service provider until the 1990s and the deployment of the GSM cellular network, the first truly devised mobile system. The GSM era saw a liberalization of the Egyptian market with many external players joining such a promising ecosystem.
Two providers emerged as the main operators of the first GSM networks, Orange Egypt (formerly known as Mobinil) and Vodafone Egypt (formerly, Click GSM). 99.96 percent of Orange’s capital is owned by Atlas Countries Support (wholly owned by Orange Group while 0.04 percent of the company’s capital is owned by a minority of shareholders. The story is a bit different with Vodafone with Vodafone Group owning 54.93 percent, Telecom Egypt 44.94 percent and a minority free float of 0.13 percent.
The competitiveness of the market increased with the advent of Etisalat Misr as the third operator in 2007. The operator is 66 percent owned by the Emirati giant E&.
The telco market welcomed controversially a fourth operator in 2017, Telecom Egypt’s We. The controversy comes from the fact that Telecom Egypt also has a major share in Vodafone Egypt. The latest agreement between Vodafone and Vodacom to transfer its 55 percent shares in Vodafone Egypt will also give Telecom Egypt additional benefits as per the amended shareholders agreement in June 2021.
The initial operation of We telecom was on Orange and Etisalat’s networks after the signing of the national roaming agreement. The fourth operator would then build its own network. Lately, Telecom Egypt has secured a 150 million Euro loan from European Investment Bank to expand its 4G network by deploying around 2000 new sites.
According to the latest ICT indicators report published by MCIT, the mobile penetration rate is of 89.69 percent with a 7.08 percent drop to the same period last year. The MCIT attributes the drop to the new recommendations of the international telecommunications union of using active line subscriptions instead of registered lines in the calculations. The internet penetration rate is below 60 percent. To this end, the MCIT has committed to improve the internet quality notably through the fiber infrastructure, in addition to increasing its adoption among the citizens. The national telecommunications regulatory authority (NTRA) further facilitated the switching between internet service providers without additional fees.
Wireless Technologies in Presence: Still No 5G?
The Egyptian market is one where 2G, 3G, and 4G coexist with no commercial 5G network available yet. The adoption of newer technologies is normally delayed by a few years compared to the global average. The second generation was introduced with the first two operators in 1998 whereas the third generation was deployed in 2007. Finally, the fourth generation LTE network was deployed in 2017. As a comparison, the first commercial 3G network was deployed in 2001 in Japan whereas the first 4G network was rolled-out in Stockholm and Oslo in 2009.
The three technologies also coexist in the allocated frequency bands at 700 MHz, 900 MHz, 1800 MHz and 2100 MHz.
Is There a Clear Hierarchy among Operators?
Establishing a proper hierarchy among operators requires looking at different measures. It terms of market share, Vodafone Egypt is the clear leader with a 43 percent share according to a report by Omdia. Orange comes next with 26 percent. Etisalat Misr follows closely with 22 percent. We telecom comes last with 9 percent of the total market, mostly on its 4G network. This is the main reason why it has been looking to increase the investment in its network infrastructure. To have a clearer picture of the market, we need to account for the 45 percent share that Telecom Egypt has in Vodafone.
The classification of the operators varies significantly when looking at the OpenSignal mobile network experience report. Surprisingly, the newcomer We ranked first in terms of video and games experience, consistent network quality, download speeds and was a joint winner in the upload speed category. Of particular importance, the consistent quality ranking quantifies the user experience with a range of applications that requires different quality of service requirements. Etisalat was the joint winner in the upload and availability categories. Vodafone was the winner in the voice app experience, 4G availability and 4G coverage experience. To correlate with Orange’s declining market shares, the operator failed to win any of the measured categories.
So What’s Next?
To say it in simple words, Egypt is about to experience what other countries did three years ago. The gradual deployment of 5G networks will open the way to new use cases and applications, new investments and partnerships. The average revenue per user (ARPU) will consequently increase leading to further gains from the telecom sector. Given the low internet penetration rate, it is rather imperative to develop use cases which will guarantee wide adoption. Smart agriculture and farming using internet of things is one particular example given that agriculture in Egypt is the major component of the economy accounting to 11.3 percent of the GDP. The NTRA has already issued the regulatory framework for internet of things provision in the country. Among the targets cited by the NTRA are smart cities, smart transportation systems, and enabling Industry 4.0.
In preparation for the next period, investments in data centers have been going well and study. Another reason for investing in data centers is the central location of Egypt between Africa and the Middle East which could make the country an important data hub.
A national system has been also set by the MCIT to improve cybersecurity, protect the infrastructure of critical sectors and build national capacities specialized in cybersecurity. This has in particular allowed the country to rank among the leading ones according the global cybersecurity index issued by the international telecommunications union.
Egypt is one most promising telecom markets in the world with a very large number of mobile subscribers and diversified economic sectors that could notably benefits from additional investments in the telecom infrastructure and introduction of new wireless technologies. The path to a digital Egypt will certainly go through drastic and rapid changes in the country. Up to this moment, the country has been lagging behind in terms of its adoption of new technologies. The beginning of the 5G era should however lead to an intensified development. The NTRA has a major role in following aggressive strategies and providing incentives to the different operators to invest in these newer evolutions. Reducing spectrum license fees and promoting increased competitiveness are two major strategies that can be followed.
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