As the mobile telecoms sector has matured and liberalised, it has put pressure on operators looking to achieve growth from a telecoms market that is reaching saturation. Indeed, even as the number of subscribers and the volume of traditional mobile traffic has continued to climb incrementally in the past few years, revenues for both prepaid and post-paid cellular service have been more or less flat since 2008, reflecting the impact of increased competition. While further economic growth and the continuous turnover typical of Bahrain’s expat-heavy subscriber base is likely to ensure that the Kingdom is an attractive mobile phone market tor for years to come, the most promising avenue for growth in the short to medium term is the rapidly expanding market for mobile broadband service.
ON THE RISE: Mobile broadband growth has been particularly robust of late, rising from 24% of internet subscriptions to 44% between 2010 and 2011, helping mobile broadband service to surpass fixed broadband service as the predominant form of internet access in the Kingdom. Overall broadband revenue grew 20% between 2009 and 2010 (the last period for which statistics are available), and has nearly doubled since 2007. Measured by the standards of its neighbours, the Bahraini market could sustain similar rates of growth for many years before topping out: mobile broadband penetration stands only at 21% in the Kingdom, compared to 59% in Saudi Arabia and 58% in the UAE. If the trends seen in Bahrain’s broadband market are any indication, capturing the rapid growth of the Kingdom’s mobile broadband market will depend on offering faster connection speeds. Consumer data provided by the Telecommunications Regulatory Authority (TRA) suggests that Bahraini consumers will be willing to pay a premium for speedier internet service as faster mobile broadband access becomes available. While prices for internet services in the Kingdom have dropped by up to 40% since 2007, revenue per user has declined only slightly in the same period; as prices have dropped, users have sought out faster, more expensive service.
This appetite for high-quality mobile internet goes hand-in-hand with the growing market for premium smartphones: all three mobile providers have rolled out the expected slate of top-quality smartphones, including the latest iPhone. The growth of this market may also have the added benefit of offering operators a chance to shift consumers towards post-paid phone plans. This appetite for bandwidth explains the large investments the country’s operators have made in improving the current infrastructure. All three mobile operators in Bahrain, which already offer 3G service, have made significant investments in upgrading their networks to support 4G long-term evolution (LTE) technology. According to a 2012 report published by International Telecommunication Union, Zain has invested around $50m in network upgrades to support LTE, VIVA Bahrain tested LTE service in Bahrain City Centre in early 2012 and Batelco has invested around $39m to deploy LTE. Despite some successful trials of these new upgrades in early 2012, the full roll-out of these upgraded networks will wait on the release of 4G broadband spectrum capacity, which the TRA plans to auction off in two tranches, beginning in first-quarter 2013. Regulators even intimated that licences for the new segments of the broadband spectrum may be offered to new entrants in the domestic telecoms market.
AN EMERGING TREND: While the Gulf region is highly developed in terms of mobile and fixed telecoms, the rapid adoption of broadband mobile service in Bahrain may be representative of a trend taking place to various degrees worldwide. In emerging markets, there is a growing proportion of “mobile-only” users who access the internet through handsets rather than computers. This percentage is as high as 70% in countries such as Egypt. While this trend can serve customers without bank accounts or desktop computers, it also emerges in rapidly developing markets such as the Gulf in which consumers are bypassing desktops in favour of new platforms. Bahrain, whose broadband subscribership is already majority-mobile, could be just such a market.
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