CITC Releases MVNO Licensing Framework
Saudi Arabia ' s telecoms regulator, the Communications and Information Technology Commission (CITC), released the framework for the award of MVNO licences on January 15. The process is due for completion in Q313 and is expected to attract significant interest from key regional operators. The Saudi government is keen to boost competition in the mobile market and the latest move is in line with BMI 's view that MVNO services provide a viable option to achieve that aim.
According to the CITC, interested operators have until May 4 2013 to submit bids for up to three licences for MVNO services. The successful bidders will pay a licence fee of SAR5mn (US$1.33mn), as well as 15% of their annual revenue to the regulator when they start operations. There will also be a further annual licence fee of 1% of revenue and other miscellaneous charges. The successful bids are expected to be announced 12 weeks after the application submission deadline, which is around August 2013. BMI will closely monitor key developments in this process.
We expect strong interest in Saudi Arabia's MVNO licences in view of the revenue and subscriptions growth potential in the market. Despite having a relatively high mobile penetration rate, Saudi Arabia welcomes millions of visitors every year coming into the country for work or religious purposes. This often boosts mobile subscriptions, albeit temporarily as a significant proportion of new lines soon become inactive when the owners leave the country. Perhaps the biggest opportunity is the potential for high usage and, consequently, strong ARPUs and revenues considering the relatively high income levels among locals and the likelihood for visitors to make frequent calls back home. That said, we believe MVNOs will target low spenders, including low-skilled foreign workers and youths, to gain a foothold in the market.
|MVNOs Will Target Low Spenders|
|Saudi Arabia Mobile Forecast, 2010-2017|