In addition to driving economic diversification and innovation, Bahrain’s expanding ICT sector is indicative of the country’s commitment to making its economy more competitive globally. With a young, tech-savvy population, and a government dedicated to investing in digital infrastructure and upskilling local talent, Bahrain has become an attractive location for technology start-ups, drawing in many international ICT-focused companies.
With high rates of smartphone penetration and mobile subscriptions per capita – combined with the rapid rollout of 5G infrastructure across the kingdom – policymakers are seeking to ensure that individuals and businesses are digitally connected, resulting in increased productivity. Bahrain’s initiatives have also attracted a number of global technology firms, underscoring the country’s role in the regional and global technology landscape.
Structure & Oversight
The Ministry of Transportation and Telecommunications (MoTT) is responsible for overseeing the telecommunications and ICT sector, driving the formulation and implementation of related strategies. In addition, the Information & eGovernment Authority (iGA) is tasked with leading the digital transformation, formulating digital policies and overseeing regulatory matters that apply to government entities. Following the enactment of the Telecommunications Law of 2002, the Telecommunications Regulatory Authority (TRA) is the sector’s primary such body.
As the first Gulf country to adopt a national cloudfirst policy – meaning that government entities should consider cloud-based solutions to support their goals – Bahrain’s policy and practice makes it well-positioned to leverage ICT opportunities in various sectors, including cybersecurity, digital entertainment, gaming, e-commerce and the outsourcing of business services. The kingdom’s policy framework underscores its commitment to fostering an environment for technological innovation and growth, with the aim being to digitalise the entire economy. In particular, Bahrain’s National Digital Economy and ICT strategy is closely linked to its broader goals under Bahrain Economic Vision 2030.
Launched in January 2022, the Telecommunications, ICT and Digital Economy Sector Strategy 2022-26 is one of six sector-specific roadmaps that form the Bahrain Economic Recovery Plan (ERP), which was developed in the wake of the Covid-19 pandemic to bolster economic growth. The strategy focuses on ensuring advanced telecommunications infrastructure, attracting large technology firms, building digital capacity to position the country as a regional ICT centre and boosting its ranking in the UN’s E-Government Development Index. Under the plan, by 2026 Bahrain has committed to increasing the number of ICT sector start-ups by 20%, automating 200 more government services, boosting national employment in the sector by 35% and training at least 20,000 citizens in cybersecurity.
Size & Performance
Bahrain’s ICT sector has consistently shown robust growth, particularly since the pandemic, resulting in the rapid digitalisation of government and private sector services. In 2022 the sector was valued at more than $3.8bn, and it is projected to expand at a compound annual growth rate (CAGR) of 10.7% to more than $6.3bn by 2027, according to data analytics firm GlobalData. Based on GlobalData’s estimates and IMF data, the sector’s GDP share was approximately 8.6% in 2022, and it is set to increase to 11.9% by 2027.
In addition to the Telecommunications, ICT and Digital Economy Sector Strategy 2022-26, this growth is the result of the kingdom’s strategic initiatives and investment-friendly environment. Bahrain ranked 51st out of 134 countries in the Portulans Institute’s Network Readiness Index 2023, and it was first in several key metrics: population covered by at least a 3G mobile network, internet access in schools and e-commerce legislation. In addition, Bahrain ranked 18th in government promotion of investment in emerging technologies.
Bahrain’s regulatory environment enables international firms based in the kingdom to enjoy 100% business ownership, as well as zero corporate and personal income tax. This in turn has led to record levels of foreign direct investment, much of which has come in through Bahrain’s ICT-related activities – whose cost base is 30-40% lower than in other GCC countries. In 2023 the Bahrain Economic Development Board (Bahrain EDB) secured more than $1.7bn in domestic and international investment, up 55% from the previous year’s figure of $1.1bn.
Leading Players
Bahrain’s telecommunications sector has historically been governed by a series of national telecommunications plans (NTPs). In November 2023 Bahrain launched the sixth NTP, aiming to boost gigabit internet speeds, extend the reach of the fibre-optic network, enhance the user experience and support the growth of the mobile market. As of July 2024, 96% of households were covered by fibre broadband, with the ERP anticipating this figure to rise to 100% by the end of the plan. In terms of market value, in 2023 total telecommunications services revenue in Bahrain was estimated at $517m, which GlobalData forecasts will rise to $696m by 2028 – increasing at a CAGR of 6.1%, alongside projected CAGRs of 7.3% in fixed broadband and 10.9% in mobile broadband.
Bahrain enjoys high rates of penetration in many metrics measuring mobile usage. According to the TRA, in the first quarter of 2024 the country had 2.45m mobile subscribers, equating to a penetration rate of more than 155%. According to the UN’s International Telecommunication Union (ITU), in 2022 the entire population of Bahrain was covered by at least a 5G network, and mobile phone ownership was 100%. That same year the average mobile broadband internet traffic per subscription in Bahrain was 317 GB, more than double the ITU’s estimated global average of 134 GB.
In 2024 Bahrain’s smartphone market revenue is projected to reach $160m, with the market segment expected to grow at a CAGR of more than 1.9% from 2024 to 2028, according to German data platform Statista. As of May 2024 the leading smartphone provider was Apple, with a market share of 34.3%, followed by South Korea’s Samsung (30.2%), and China’s Xiaomi (9.8%), Huawei (6.9%) and Oppo (4.7%).
Bahrain’s telecommunications landscape is split between three principal players with similar market shares: Bahrain Telecommunications Company (Batelco); stc Bahrain, the local subsidiary of Saudi firm stc Group; and Zain Bahrain, the local subsidiary of Kuwaiti firm Zain. In the first quarter of 2024 Batelco led the market with a 39% share, followed by stc Bahrain at 34% and Zain Bahrain at 28%. The prepaid market was similarly split, with Batelco holding 39% of the market, stc Bahrain 29% and Zain Bahrain approximately 32%. However, stc Bahrain led in the postpaid market with a share of 42%, compared to 37% for Batelco and 20% for Zain Bahrain.
In a regional context, Bahrain had some of the most affordable fixed broadband and mobile broadband in the GCC, with substantial reductions in costs for mobile (16%) and fixed broadband prices (18.6%) between 2021 and 2022. During the same period, mobile prices fell by 58.5%. Bahrain’s leased line prices are also among the least expensive in the GCC and in line with the average for OECD countries.
Network Expansion & Upgrades
5G rollout is a key part of Bahrain’s telecommunications strategy, having been incorporated into the fifth NTP when the TRA assigned a spectrum in the 3-GHz band to all mobile operators to facilitate their 5G rollout. In April 2021 Bahrain completed its 5G launch, becoming the first country in the Middle East and one of the first in the world to offer 5G coverage to its entire population. As a result, the kingdom’s 5G penetration rate is projected to increase from 41% in 2023 to 75% by 2028. “Bahrain is continuing to advance its ICT infrastructure by investing in highspeed internet, 5G, cloud computing and smart city initiatives,” Rashed Al-Snan, CEO of Bahraini telecommunications company Etisalcom, told OBG. “By fostering innovation, the country is positioning itself as a leader in the region’s digital transformation.”
In March 2024 Finnish technology firm Nokia announced a partnership with Batelco to deliver private wireless 5G networks across Bahrain. This initiative plans to leverage Nokia’s Private Wireless portfolio to enable various industry use cases. Nokia’s technologies – including its Modular Private Wireless solutions for LTE and 5G, and its Digital Automation Cloud – will ensure 4G and 5G coverage, as well as high-performance connectivity. The collaboration also includes edge computing capabilities, value-added applications and industrial devices.
In March 2024 Huawei and stc Bahrain signed two memoranda of understanding to develop a 5.5G network and undertake a 2B digital transformation. The partnership seeks to collaboratively advance the use of new spectrums, roll out a 5.5G network, implement the Fixed Wireless Access 2.0 home broadband strategy, promote the internet of things, integrate network intelligence and boost stc Bahrain’s capabilities in the business sector.
Given its location between Europe, Asia, the Middle East and Africa, Bahrain benefits from its proximity to the in-progress, 21,700-km SEA-ME-WE 6 cable, which will connect 14 countries running from South-east Asia through the Gulf to Western Europe. Branching off this will be the 1400-km Al Khaleej Cable, connecting the UAE to Bahrain, Oman and Qatar – facilitating data exchange and international connectivity for the entire region. Fully owned by Batelco and set to be operational by the second quarter of 2026, the Al Khaleej Cable will feature 10 fibre pairs with 12.6 Tbps of capacity in each. In May 2023 Beyon, Batelco’s parent entity, announced a $250m investment in digital infrastructure to support Bahrain’s digital transformation through the kingdom’s integration with the SEA-ME-WE 6 cable and the construction of a local data centre. In October 2023 Batelco launched the wavelength service Bwave as part of its network expansion.
Internet
Bahrain was one of the first countries in the Middle East to have a fully liberalised broadband market, leveraging connectivity to drive broader economic development, and the kingdom enjoys extremely high internet penetration rates. In 2022, 100% of Bahrain’s population used the internet, according to the ITU. That year Bahrain recorded 0.853 exabytes of fixed-broadband internet traffic, which averages out to roughly 561 GB per person based on the IMF’s population figures for the year. Service delivery performance has also improved, especially since the pandemic, with fixed internet speeds increasing by 3.75 times between the second quarters of 2020 and 2023. Bnet, the sole operator of the kingdom’s fibre-optic broadband network, believes 100 Mbps should be the minimum download speed, while aiming for upload speeds to be equal to at least 50% of download speeds. However, as of April 2024 broadband download speeds averaged 86.5 Mbps and upload speeds came in at 20.7 Mbps.
Start-Ups
Bahrain’s start-up ecosystem was valued at $1.2bn between the second halves of 2021 and 2023 by Startup Genome’s Global Startup Ecosystem Report 2024, up 40% in comparison to the period between the second halves of 2019 and 2021. According to the report, the start-up segment’s strengths were in financial technology (fintech); cybersecurity; and artificial intelligence (AI), big data and analytics. The Heritage Foundation’s 2024 Index of Economic Freedom ranked Bahrain fourth within the MENA region, while the ITU’s ICT Development Index 2023 placed the country among the top 10 overall out of 169 economies in its global ranking.
Bahrain’s supportive ecosystem, financing options and permissive regulatory environment are some of the main drivers of its fintech space. One notable example is Eazy Financial Services, which in 2018 became the country’s first company to receive a licence from the Central Bank of Bahrain to offer fingerprint payment services, bolstering the country’s reputation in the fintech sector. Through a September 2022 partnership with cryptocurrency exchange Binance, Eazy Financial Services has expanded into the cryptocurrency space, enabling real-time cryptocurrency payments via QR codes generated by its point-of-sale systems.
Other fintech developments include the launch of Zain Bahrain’s sharia-compliant Bede app in February 2024; a partnership announced in February 2023 between the TerraPay and Beyon Money remittance platforms; and lending services from Tarabut Gateway and FLOOSS. Doctori, a health technology start-up, connects doctors to patients through video calls, facilitating testing and treatment – enabling the company to play a key role during the pandemic. In July 2021 the company announced that it had secured $500,000 in seed funding.
A cornerstone of future start-ups is ensuring collaboration between the private sector and academia, taking advantage of the work of specialists. In particular, Bahrain has benefitted from the expertise of international organisations such as technology companies Amazon Web Services (AWS) and Microsoft, and US-based cybersecurity firm SANS – all of which work closely with Bahraini educators and companies to provide training and development. Such partnerships enhance the local talent pool, while also ensuring that the kingdom remains at the forefront of technological advancements.
E-Government
A key part of the Telecommunications, ICT and Digital Economy Sector Strategy 2022-26 is the country’s continued digital transformation through iGA initiatives. In 2023 the government e-portal attracted approximately 19m visits, while the launch of 66 integrated services led to the number of e-services available expanding to 680. Due to procedure redevelopment, consultations and 94 national initiatives, in 2023 the iGA reduced transaction times for government services by 65%, and lowered related costs for citizens and residents by 95%. Mobile apps remain one of the most popular channels for accessing e-government services, which recorded more than 1.2m transactions in 2023, a 14% increase compared to 2022.
Cloud Computing
The kingdom is a significant regional player in the cloud segment. The Bahrain EDB reports that the kingdom has the fastest-growing cloud market in the world, while the International Data Corporation (IDC) projects spending on public cloud services in Bahrain to increase by 14.9 times between 2018 and 2026. This growth is expected to be driven by digital transformation initiatives spearheaded by the government and private entities. For instance, AWS data centres located in Bahrain have been a significant catalyst for cloud adoption within the kingdom. According to an economic impact study published by the IDC in September 2023, cloud spending is forecast to contribute $1.2bn to Bahrain’s GDP by 2026, with 2.3% of GDP to be derived from the cloud sector and related services. Furthermore, cloud computing is expected to generate more than 9300 jobs, accounting for 0.8% of total estimated employment in 2026.
Future Prospects
Bahrain’s initiatives and regulatory framework have positioned the kingdom as a key ICT player in the Gulf. In 2023 the financial services sector – which has now overtaken oil and gas as the largest contributor to Bahrain’s economy – accounted for 17.8% of real GDP, followed by crude petroleum and natural gas (16.1%), manufacturing (13.6%) and government services (13.3%). With the sharp growth witnessed in the country’s fintech sector in recent years, as well as the increased digital banking spurred by more widespread technological adoption, this pivot is highly relevant to the ICT sector’s future prospects as it integrates more closely into other segments of the economy.
The government is also prioritising the development of the kingdom’s ICT sector at the international level. The opening of the Bahrain EDB’s office in Singapore in November 2023 is the organisation’s first such location in South-east Asia. The office plans to focus primarily on attracting inward investment in ICT, leveraging the Association of SouthEast Asian Nations’ dynamic digital economy, which generated $100bn in revenue across all segments in 2023. In addition, in July 2023 Bahrain and the UK signed a digital economy partnership to boost trade and cooperation in fintech, cybersecurity and space. This collaboration seeks to bolster existing growth in the ICT sector, while also ensuring broader economic diversification. The emphasis on digital transformation, e-government and AI-led solutions is in line with global trends, positioning Bahrain as a competitive player in the international market. The country’s strategic location, coupled with its liberal investment policies, further enhances its appeal as a gateway to the GCC market and beyond.
Outlook
Bahrain’s ICT sector demonstrates significant potential, as it is being propelled by a robust strategic framework, ongoing investment and a commitment to the digital transformation of the economy and government services. Collaboration with international technology companies and the government’s focus on creating an enabling environment for technological advancements are likely to attract significant foreign direct investment. These efforts, combined with initiatives like its cloud-first policy and extensive e-government services, as well as the kingdom’s proactive approach in areas like cybersecurity and fintech, are expected to open new avenues for Bahrain’s economic diversification.
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