The ICT sector in Bahrain is now a major pillar of the economy, and also one of the core sectors Bahrain is focused on developing, both to attract direct foreign investment but also to grow human resources and help propel Bahrain as a regional ICT centre. Recent years have seen a significant expansion in the ICT landscape, as well as a push towards cutting edge technologies. The country’s fourth National Telecommunication Plan, which was released in early 2016, is a further example of the government’s strategic goals and planning when it comes to the sector (see analysis).

NUMBERS: ICT plays a strong role in Bahrain. The transport and communications sector, which includes ICT, contributes more than 7% to the country’s GDP. According to the Bahrain Economic Development Board, the sector’s rapid expansion is a reflection of the growth of technology across the GCC region, which is expected to grow 10% a year over the next five years, with spending reaching nearly $200bn by the end of 2015.

Despite its relatively small size, the kingdom is home to one of the most sophisticated ICT sectors in the region, and it holds significant importance globally. According to the UN International Telecommunications Union “2016 Global ICT Development Index”, Bahrain’s ICT sector ranked 29th in the world.

Meanwhile, according to the World Economic Forum’s “Global Information Technology 2016 Report”, Bahrain was ranked 28th out of 139 countries in terms of overall networked readiness, up two places from 2015. The report’s regulatory environment sub-index placed the country 36th, while for business and innovation environment the country ranked 29th. However, it is in regards to usage that the country outperforms its peers. For individual usage the country was rated 14th in the world, while for government usage it was third, behind only Singapore and the UAE.

While the economic impact of Bahrain’s networked connectivity had it in 48th place globally, for social impact it was ranked 13th, with 91% of people in the country using the internet, the tenth highest in the world. Moreover, 94.6% of households had personal computers, and 81% of households had access to the internet. The country also came 7th in terms of the provision of government services available online.

BROADBAND: According to the latest figures available from the Telecoms Regulatory Authority (TRA), the government agency charged with oversight of the sector, there were just over 2m broadband subscribers in Bahrain in the second quarter of 2016, a 2% rise from the fourth quarter of 2015, with a broadband penetration rate of 144%. This was up from 129% in 2013, and 7% in 2007. Mobile broadband subscribers represented 89% of total subscribers.

Total broadband traffic reached 119m GB in 2014, compared with 74m GB in 2013, representing a 62% growth rate, of which mobile broadband represented 52%, up from 36% in 2013; fixed wireless broadband represented 25%, and fixed wired broadband 23%. Highlighting the push towards faster broadband internet penetration, 24% of fixed broadband subscribers were on plans with speeds equal to or above 10 Mbps at the end of 2014, up from 10% in 2013, while a further 48% had plans with advertised speeds of up to 2 Mbps.

According to the TRA, the reduction in broadband prices in Bahrain has resulted in a substantial drop in average revenue per subscription over the last four years, of 25% for residential and 42% for business subscribers. Business subscribers saw their bills drop from BD85.4 ($226.5) per month in 2010 to BD49.6 ($131.6) per month in 2014, while residential subscribers saw a drop from BD15.8 ($41.9) to BD11.9 ($31.6) per month.

INFRASTRUCTURE: In June 2016 Bahrain Telecommunications Company (Batelco) announced the launch of the Batelco Gulf Network (BGN), a venture undertaken with the GCC Interconnection Authority (GCCIA) that aims to establish a fibre-optic cable system spanning 1400 km that will run on the GCCIA electricity power grid and offer high bandwidth to all GCC countries. The cable can be connected with other regional submarine cables, allowing higher-speed connectivity to Europe and Asia. The goal is to further establish Bahrain as a key regional and global centre for ICT industries, and raise the importance of Batelco. “BGN will drastically improve Bahrain’s position on the digital map,” Abderrahmane Mounir, COO of Batelco Bahrain, told OBG. “Bahrain has a strategic location, and is also a financial centre, so those companies need international connectivity. Today there are a few cables coming in through consortiums but BGN will provide an alternative route and a much higher capacity.” Batelco will have full responsibility for managing the network.

ICT LANDSCAPE: Bahrain hopes to become a focal point for budding entrepreneurs and IT firms, and a number of new initiatives could help it realise this goal. In August 2014 it was announced that the Bahrain Exchange was in the process of launching an Investment Market, which would function as a stock exchange for small and medium-sized enterprises as well as tech startups. The exchange will have advisors to guide companies through the process of listing.

In December 2015 technology investor C5 Accelerate announced the launch of what it claims will be the first cloud accelerator to operate in the MENA region. The accelerator, launched in conjunction with Amazon Web Services, the Bahrain Economic Development Board and Tamkeen – a government fund to support private sector development – will involve up to 10 startups from across the Middle East and Africa. The startups will be invited to a 4-month residential programme in Bahrain, with the companies then eligible for funding from a $100m allied venture capital fund. “There is a strong drive within the government to stimulate new businesses, and the existing infrastructure, connectivity and rational visa policies create an enabling environment for businesses to thrive,” Abdulla Al Ghatam, CEO of Sadad Electronic Payment System, told OBG.

E-GOVERNMENT: The kingdom launched its first e-government strategy in 2007, and in subsequent years has invested heavily in e-government platforms and services. The initiative is aimed at streamlining government services, while also cutting costs and improving the overall experience for end users. “E-government is one of Bahrain’s strengths as the leader of the Middle East in most rankings on government preparedness for the digital age,” Mounir told OBG. “Digitisation of government services allows the government to cut costs in a way that also improves the quality and convenience of services offered. There is still some cultural hesitation to doing things on mobile apps or online rather than going to a physical office, but this is quickly changing and Bahrainis are already leading the world in terms of digital literacy, so government promotion of these services will continue to boost both metrics.”

OUTLOOK: Bahrain’s emergence as a major regional IT centre looks set to continue. A favourable investment climate, government support, and significant ICT infrastructure, means that tech firms are likely to continue looking at Bahrain as a potential base of operations.