ICT in Bahrain supported by regulatory framework and demand for data services

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With developed ICT infrastructure, high penetration rates, a tech-savvy population and a business-friendly ecosystem, Bahrain has much to offer investors. The kingdom’s geographically and demographically compact market provides an ideal sandbox for tech companies and start-ups to experiment and roll out pilot programmes, giving it a well-established research and development pedigree. In terms of telecoms, there are three major providers in operation, with the largest, Bahrain Telecommunications Company (Batelco), undergoing a reorganisation in mid-2019. The second and third-largest, respectively, are Saudi Arabian-owned stc Bahrain and Kuwait-headquartered Zain. Telecoms providers across the world have faced challenges due to rising costs of keeping up with the latest technology and decreasing revenue from traditional offerings such as voice services. However, telecoms companies in Bahrain have achieved a significant level of profitability and stability in recent years.

Meanwhile, the kingdom has introduced a series of major development plans to promote the expansion of a range of fields including data centres, software services and cloud computing. E-commerce also continues to grow, along with digital content creation and business services. These developments have been supported by the implementation of the new Personal Data Protection Law (PDPL) in 2018, which took effect in August 2019, ensuring that the sector remains aligned with best practices globally.

Structure & Oversight

The main government body overseeing the sector is the Ministry of Transportation and Telecommunications (MTT). Within the MTT, the Telecommunications Directorate is responsible for developing policy and legislation, as well as implementing sector strategies. The industry is governed by the Telecommunications Law, which came into force in 2002 and liberalised the telecoms market, allowing other mobile service providers to operate in Bahrain. The law also established the Telecommunications Regulatory Authority (TRA) as the sector’s independent regulator.

The MTT, in consultation with the TRA and industry stakeholders, prepares and implements the National Telecommunications Plan (NTP), which sets out government policy and objectives for the sector. The NTP is currently in its fourth iteration, which was launched in 2016. According to the MTT, the fifth NTP was under development in mid-2019, which will address several new technology and policy areas.

Since the first NTP was outlined in 2003 the sector has undergone a process of liberalisation, and it continues to develop further. The first iteration of the plan opened up the industry to private sector entrants, ending the monopoly held by the kingdom’s largest telecoms player, Batelco.

Sector Performance

According to the TRA’s “Annual Report 2018”, overall telecoms revenue in the kingdom reached BD426m ($1.13bn) in 2017, down 1% from BD430m ($1.14bn) the previous year. The sector contributed an estimated 3% of Bahrain’s GDP in 2017, down from 4.7% in 2016 but a considerable increase compared to the 2014 figure of 1.65%.

Nevertheless, around BD54m ($143.2m) was invested in the telecoms industry in 2017, demonstrating a continued interest in improving services and offering the latest technology. The TRA report also showed that public opinion towards the sector is generally positive, with 83% of respondents to a 2017 survey satisfied with their mobile service, and 85% satisfied with their overall broadband service.

Around $143.2m was invested in the telecoms industry in 2017, demonstrating a continued interest in improving services and offering the latest technology Furthermore, Bahrain performed strongly in global sector rankings – according to the “Global Competitiveness Report” published by the World Economic Forum in October 2018, Bahrain ranked third globally in terms of internet user percentage, at 98%. The kingdom also placed fifth worldwide for its mobile broadband penetration rate and 10th in terms of its mobile phone penetration rate.

Mobile Market

With a population of around 1.57m in 2018 Bahrain is the smallest domestic market in the GCC, making the rollout of new technology relatively straightforward. Bahrain currently has a nationwide 4G LTE network in place and the kingdom’s three major mobile operators also launched 5G networks in 2019. Pre-paid subscriptions have traditionally held the largest share of the mobile subscriptions market due to the large number of expatriates living and working in Bahrain.

The most recent available data from the Gulf Labour Markets Migration and Population Programme showed that there were 677,506 Bahrainis and 823,610 non-Bahrainis living in the kingdom in 2017. However, slowing economic growth has caused a decrease in demand for expatriate workers, contributing to the decline in pre-paid subscriptions.

According to the TRA, there were 2.09m mobile phone subscriptions in Bahrain at the end of the second quarter of 2019, representing a penetration rate of 139%. This is a slight increase compared to 2.08m subscriptions – or 138% of the population – in the first quarter of the year. However, mobile subscriptions have experienced a considerable decline in recent years, falling from a record 3m subscriptions in 2016 to 2.1m at the end of 2018.

Although penetration rates appear to have stabilised, this represents a significant change in the market, particularly for the pre-paid segment, which has experienced a considerable fall in subscriptions. In the second quarter of 2019 pre-paid plans accounted for 68.8% of the market, down from 71% in the same period of 2018 and 81% at the end of 2016. In contrast, post-paid mobile subscriptions are on the rise, reaching a market share of 31.2% in the second quarter of 2019, up from 29% in the same period of 2018 and 19% at the end of 2016. The overall decrease in subscriptions has also been reflected in mobile phone sales; the kingdom’s mobile phone imports fell by 25.5% year-on-year (y-o-y), from 78,641 in June 2018 to 58,600 in June 2019.

At the same time, voice traffic has also been trending downwards in recent years. Average monthly minutes per user stood at 232 in the second quarter of 2019, down from 242 in the previous three months and 254 in the second quarter of 2018. Both domestic and international voice traffic have seen a considerable decline in recent years. Total domestic minutes fell by 13.1% y-o-y in the second quarter of 2019, while international outgoing minutes decreased by 16.1% over the same period.

Meanwhile, mobile data usage has increased steadily in recent years. In the second quarter of 2019 total mobile data traffic stood at 72 GB, up from 67 GB in the first quarter of the year and 65 GB in the second quarter of 2018. Average monthly mobile broadband traffic per mobile subscription remained steady, however, at 11 GB, up slightly from 10 GB in the second quarter of 2018.

Internet speed has also improved considerably in Bahrain. According to the Speedtest Global Index, a monthly report produced by mobile and broadband intelligence firm Ookla, Bahrain ranked 58th in the world for mobile download speed in September 2019, which averaged 30.34 Mbps. In comparison, the kingdom ranked 84th in September 2018, with a mobile download speed of 16.8 Mbps.

Fixed-Line Services

Rising demand for data services has also impacted trends in the fixed-line and broadband market. TRA figures show that the total number of fixed-line subscriptions increased from 225,479 at the end of 2018 to 226,004 in the second quarter of 2019. However, the number of fixed wireless subscriptions has decreased considerably, while fixed wired network usage continues to rise. Wireless subscriptions accounted for 18.5% of the fixed-line market in the second quarter of 2018, compared to 13.7% in the same period of 2019.

The number of broadband subscriptions increased 9% y-o-y in the second quarter of 2019, from 2.1m to 2.3m, with the penetration rate rising from 143% of the population to 156%. This increase was largely driven by a growth in subscriptions for dedicated broadband – services accessed from a fixed location – which rose 13% y-o-y in the second quarter of 2019, from 589,242 to 670,551. Within this segment, both fixed-line and standalone broadband subscriptions increased by 9% and 16% y-o-y, respectively. Standalone broadband, which refers to connection accessed by dongle, USB or tablet, is the largest of the dedicated broadband subsegments, accounting for 70.4% of the market, while fixed line made up the remaining 29.6%. According to the most recent TRA figures, average monthly broadband traffic per fixed-line subscription rose 32.8% y-o-y in the first quarter of 2019, from 115 GB to 153 GB. Overall, fixed-line penetration stood at 15% in 2018.

Data consumption has also continued to rise. In the second quarter of 2019 it reached a total of 167m GB, an increase of 17.5% y-o-y. The TRA attributed this growth to customers switching from wireless broadband to mobile networks. This trend is expected to continue as mobile broadband speed and capacity increases, particularly as the kingdom transitions to 5G networks in the years ahead.


The market leader, Batelco, was founded in 1981 as a joint stock company. Under the fourth NTP Batelco was separated into two entities with the creation of a new wholesale-only company, BN et, and a restructure of the retail and enterprise arm, known as Batelco Bahrain. The legal separation process was completed in May 2019. BN et is responsible for the kingdom’s National Broadband Network, known as NBN, and will work alongside the government to ensure nationwide coverage and availability of fibre-optic broadband services.

The MTT aimed to provide fibre-optic broadband to 95% of households and 100% of businesses by the end of 2019. Additionally, in March 2019 the government announced that Bahrain would be among the first countries in the world to roll out 5G technology. As of the fourth quarter of 2019, 5G services had been rolled out by Bahrain’s three major mobile operators.

Batelco’s financial results for the first nine months of 2019 showed a slight y-o-y decrease in overall revenue, down 1% from BD301.5m ($799.7m) to BD298.5m ($791.8m). Operating profit fell by 8%, from BD60.5m ($160.5m) to BD55.6m ($147.5m). Within the domestic market, the company’s revenue from fixed broadband rose 12% y-o-y, while data communications sales increased by 13%. The most recent results mirror a trend seen in Batelco’s end-2018 figures, in which revenue from fixed broadband and data communications were up 15% and 27%, respectively, compared to 2017.

Batelco has been working with several foreign operators to boost the kingdom’s ICT and telecoms infrastructure. In October 2018 the company worked with Chinese telecommunications company Huawei to build a 1.3-MW Tier-III data centre in Bahrain, extending its existing facility at Ras Abu Jarjur. In addition, in March 2019 the company signed a point of presence agreement with European data centre services firm Interxion. The access point will be located in the French city of Marseille and will support growing demand from Bahrain and the GCC for internet bandwidth and content in Europe.

In June 2019 Batelco also announced that a joint venture had been signed with Dubai telecommunications firm du to establish a regional infrastructure platform. The platform will deliver data centre services across the GCC in line with the kingdom’s longterm ICT development plans. Batelco also launched a digital mobile wallet in 2018, known as bwallet, in collaboration with Arab Financial Services. The platform includes services such as international money transfer and international mobile top-up.

stc & Zain

Batelco shares the telecoms market with two other providers, the largest of which is stc Bahrain, previously branded as VIVA, which obtained its licence in 2009 and entered the commercial market in 2010. The firm is fully owned by Saudi Arabian publicly owned telecoms provider Saudi Telecom Company. In January 2018 stc Bahrain bought Menatelecom, which had been the fourth-largest operator, from Kuwait Finance House. Following this acquisition, Menatelecom was merged into stc Bahrain, with the company requesting that the TRA revoke a number of operating licences previously held by Menatelecom in December 2018. According to the most recent available figures, stc Bahrain’s revenue in the first quarter of 2019 reached KD66.6m ($219.4m), down from KD77.6m ($255.6m) in the same period of 2018. However, the company saw a 4.2% y-o-y growth in its earnings before interest, tax, depreciation and amortisation, from KD18m ($59.3m) to KD18.7m ($61.6m). stc Bahrain’s customer base totalled around 2.04m as of March 2019. stc Bahrain has also recently expanded its network infrastructure and broadband offering. In March 2019 the firm signed an agreement with Etisalat, a UAE-based telecoms firm, which will enable stc Bahrain to use its SmartHub, a data centre located at the submarine cable landing facility in Fujairah. This will enable the firm to conduct direct connection with Tier I international carriers and other global services. Additionally, in March 2019 stc Bahrain signed an agreement with Huawei to provide 5G infrastructure. In June 2019 the firm also announced the rollout of its 5G home broadband network, with an add-on offering speeds of up to 1 Gbps.

The third-largest operator is Zain, which entered the Bahraini market in December 2003 after the government’s measures to liberalise the telecoms industry. The company is part of Kuwait-headquartered Zain Group, which operates in eight other countries, alongside a joint venture in Morocco and a government management contract in Lebanon.

Zain’s results from the first half of 2019 showed a 8.6% increase in net profit y-o-y, from BD2.33m ($6.2m) to BD2.53m ($6.7m). Operating profit expanded 34.1% over the same period, from BD2.32m ($6.2m) to BD3.11m ($8.2m). The company attributed its robust performance to increased efficiency, cost optimisation and growth in the consumer and enterprise segments. This is likely to continue in the years ahead as Zain continues to introduce new strategies to reduce costs. For example, in mid-2019 the firm opened its first smart branches with self-service machines, reducing the need for sales representatives and branches.

However, the need to boost operational efficiency is necessary as revenue declined by 7% between the end of 2018 and the first six months of 2019, from BD32.6m ($86.5m) to BD30.5m ($80.9m). This continued a trend also seen in the 2018 results, when revenue decreased 10% from BD72.8m ($193.1m) to BD66.2m ($175.6m). Nevertheless, net profit increased by 20% in 2018, rising from BD4.3m ($11.4m) to BD5.2m ($13.8m).

Other Telecoms Providers

In addition to the three main telecoms companies, there are several smaller internet service providers operating in the kingdom. These include Etisalcom Bahrain, which provides turnkey ICT solutions for corporate, public sector and residential clients; Northstar Technologies, which offers both internet and telephony services; Nuetel Communications, a triple-play telecommunications provider responsible for the ICT network on Amwaj Islands, an artificial offshore development and Bahrain’s first intelligent city; Rapid Telecom, which provides dedicated internet connections; and Kalaam Telecom, formerly known as Lightspeed. Kalaam offers a range of advanced voice and data services, which are available to both corporate and household customers.

Regulatory Environment

Bahrain has a reputation for possessing one of the most liberal regulatory regimes in the region. For example, unlike some of its neighbours, there are no voice over internet protocol restrictions in place in the kingdom. In terms of content restriction, the Information Affairs Authority – the executive arm of the Ministry of State for Information Affairs – is responsible for formulating policy in this area.

At the same time, Bahrain has had a robust framework of intellectual property legislation in place since 2006, as a result of its active free trade agreement with the US, which required the kingdom to provide increased protection for intellectual property rights. Bahrain is also a signatory to the Paris Convention for the Protection of Industrial Property and the Berne Convention for the Protection of Literary and Artistic Work, and most recently ratified its obligations to these agreements in 2006.

Data Protection & Cybersecurity

Alongside strategies to enable the kingdom to become a global centre for ICT, there have been a series of recent developments in cybersecurity and data protection. In terms of the latter, the PDPL was enacted in July 2018 and put into force on August 1, 2019. Under this new legislation, companies are required to obtain customers’ consent to collect, process, store and use any form of personal information for commercial purposes. The law also plans to establish a Personal Data Protection Authority, which will be responsible for overseeing implementation and compliance of these regulations. However, as of mid-September 2019 no official announcement had been made regarding this body. The authority’s approval will be necessary before an organisation is able to use certain forms of personal data, such as facial recognition or smartphone thumbprint data.

Failure to comply with the law will be regarded as a criminal matter, in contrast to EU and US legislation on this issue, which classes violations as civil cases.

Regarding cybersecurity, the General Directorate of Anti-Corruption and Economic and Electronic Security, within the Ministry of the Interior oversees Bahrain’s National Cybersecurity Strategy, while the Information & eGovernment Authority (iGA) focuses on government and public sector network security.

In 2017 the TRA introduced the Critical Telecommunications Infrastructure Risk Management Regulation, which was a major step for the kingdom as it was the first legislation of its kind to be passed. The regulation has helped coordinate responses to cyberthreats and plug gaps in security across public and private sector organisations. As a result of these measures, the International Telecommunication Union rated Bahrain’s cybersecurity framework as being in the mature stage in its Global Cybersecurity Index 2018. The report placed Bahrain 68th out of the total 175 countries surveyed and seventh out of 22 nations in the region.

This promising regional ranking is reflected in the fact that Bahrain has led the way in establishing GCC-wide cybersecurity networks. According to regional media, in August 2019 members of Bahrain’s National Assembly advanced a proposal for a unified Gulf Cybersecurity Centre to be set up, with the kingdom playing a central role.

The segment is expected to expand rapidly in the GCC as the countries seek to diversify their economies. Key regional players include C5 Accelerate, which specialises in supporting cloud-based technology companies, and CTM360, which has contracts with 25 of the GCC’s 50-largest banks, as well as firms in major sectors such as energy and aviation.


In February 2019 Bahrain also updated the regulatory environment for cryptocurrency trading. The new framework enforces rigorous background checks, governance standards and cybersecurity requirements, in order to attract international firms looking to establish themselves in a well-regulated market. The reform has already seen promising results; in July 2019 ZPX, a start-up building a decentralised cryptocurrency exchange in Singapore, chose Bahrain to launch its trading platform, known as Qume. In the same month BitMEX Ventures, the investment arm of cryptocurrency trading platform BitMEX, invested in Bahraini cryptocurrency exchange Rain. Overall, Rain raised around $2.5m in a seed funding round led by BitMEX Ventures and Kuwaiti cryptocurrency fund Blockwater. The exchange also received a crypto-asset module licence from the Central Bank of Bahrain in 2019, which it claims was the first time this licence has been issued in the Middle East.

E-Government & Cloud Services

The NTP comes under the framework of the government’s national development plan, Economic Vision 2030, and the short-term National Development Strategy. This includes the National Enterprise Architecture Framework (NEAF), which aims to bring all government entities within a unified, integrated IT network. This is spearheaded by the ICT eGovernance Committee, which includes representatives from government ministries and the Economic Development Board, the kingdom’s investment agency. Under the NEAF, all public agencies in Bahrain are transitioning to cloud services.

Meanwhile, the iGA has been working to integrate government systems through the development of online services such as paperless licences and identity cards. It is hoped that this will improve access to statistical information and strengthen cybersecurity. The iGA also works alongside the Directorate of Wireless Licensing, Frequency and Monitoring and the Spectrum Strategy Coordination Committee in drawing up the National Frequency Plan, the most recent of which launched in 2016. The plan allocates radio spectrum licences according to national priorities, such as economic development, the encouragement of competition in the ICT sector and international obligations in the telecoms market.

The rollout of cloud services across the public sector has been facilitated by the opening of the first Amazon Web Services (AWS) centre in the MENA region in July 2019. The fact that Bahrain was chosen as the location for the Middle East centre is a testament to its attractiveness as an innovative and business-friendly market. The centre consists of three availability zones offering a wide range of cloud services. In December 2019 AWS announced plans to establish cloud innovation centres at the University of Bahrain and Bahrain Polytechnic, which will enable public sector organisations to access support in developing new technologies.

AWS is also working alongside the Bahraini government to support tech companies and boost digital literacy. Tamkeen, a semi-autonomous government business development agency, is financing 100% of the cost of AWS certification courses for Bahraini citizens. Tamkeen also has an important role in supporting local IT start-ups, offering funding, training and advisory services (see analysis). “Tamkeen is looking at companies that have capacity to expand regionally, especially in Saudi Arabia,” Rashid Al Snan, CEO of Etisalcom Bahrain, told OBG. “Software firms are of particular interest because they are easy to export and scale up.”

Bahrain follows an open-data policy, providing a wide range of non-sensitive information to the public. The iGA sources this data and distributes via an online portal, with the information provided not subject to any restrictions. The government also makes increasing use of big data, which is used as the basis of the consumer price index, administration and population registers, and services such as VegeMarket – a platform displaying daily fruit and vegetable prices. These services have helped to reduce costs and produce more up-to-date data. At the same time, the kingdom’s e-government strategy has seen many public sector services become available online or through self-service kiosks, which resemble ATMs and are located across the country.


Bahrain’s e-commerce segment has also expanded considerably. “Online retail sales have seen double-digit growth in recent years,” Shulaman Naicker, operations manager of Landmark Group, a UAE-based retail conglomerate, told OBG. “Bahrain is able to act as a warehousing and transport hub for distribution beyond its borders, given the kingdom’s ease of doing business and relatively low costs.”

This is already evident, with several international retail and e-commerce companies choosing to establish themselves in the kingdom. For example, Chinese cross-border e-commerce company Jollychic bases its warehousing facilities in Bahrain, while multinational courier delivery services company FedEx signed a letter of intent in February 2019 to set up warehouse space at Bahrain International Airport’s new 25,000-sq-metre cargo terminal.


Telecommunications companies in Bahrain face many of the same challenges as providers in other countries, with a decline in demand for voice services, accelerating data consumption and higher investment costs, particularly as infrastructure spending is disproportionately allocated to the rollout of the 5G network. As a result, cost reduction will be a priority for telecoms providers in the immediate future, as will increasing efficiency and seeking new business models.

Nevertheless, tech firms and start-ups will continue to benefit from the kingdom’s relative ease of doing business and government support in the form of funding, accelerators and incubators. Bahrain will also remain an ideal testbed for new products, as a result of its compact size and well-developed ICT infrastructure. Ultimately, Bahrain’s culture of adaptation and innovation will be a useful asset as it moves to cement its place in the regional market.

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The Report: Bahrain 2020

ICT chapter from The Report: Bahrain 2020

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