Since the beginning of the Covid-19 pandemic, mobile networks have provided the reliable connectivity needed to sustain economic and social activities. As MENA countries gradually brought the pandemic under control, their governments have sought to drive economic recovery and foster sustainable development. Digital services and technologies have been instrumental in achieving this goal, spurring economic growth, empowering the workforce and leveraging ICT-related efficiencies to boost productivity.
Technological breakthroughs are driving change in the telecommunications industry. Mobile services are expanding and diversifying for both the business-to-business (B2B) and consumer markets. The growing penetration of mobile devices and technological advancements is increasing the prospects of mobile virtual network operator (MVNO) services worldwide.
An MVNO does not own a mobile spectrum licence but uses the existing network infrastructure of a licensed operator to sell mobile services under its own brand name. This increased competition boosts demand and helps to reduce service costs for the final consumer.
MVNO Market
Kuwait’s mobile telecommunications services are offered by three local operators – stc, Zain Kuwait, and Ooredoo Kuwait. The Communication and Information Technology Regulatory Authority (CITRA), the entity authorised to regulate the ICT sector, has been planning to enhance the competitiveness of Kuwait’s mobile market, and generate more accessible and competitive mobile services.
In March 2021 CITRA issued the first MVNO licence in the country to Virgin Mobile Kuwait, a joint venture between stc – which owns 10% – and UAE-headquartered Virgin Mobile Middle East and Africa. The latter served over 3m customers across the Gulf region prior to its entry in Kuwait. Under the agreement, stc will act as the host facilities-based provider and Virgin Mobile Kuwait will operate using its network. It will offer prepaid plans and digital services to customers.
As the first MVNO to enter the market and the fourth service provider in Kuwait, the company intends to disrupt the sector by launching its fully digital app-based proposition and providing its customers with a biodegradable SIM card. It officially launched its operations and services in Kuwait in May 2022.
Market Challenges
The new MVNO market player is helping CITRA to promote competition and provide more affordable mobile plans to users. However, Virgin Mobile Kuwait has entered a relatively developed market with established market dynamics. It will likely face stiff competition from the three existing players. 5G user penetration in Kuwait had reached nearly 17% by September 2021 – the highest of any GCC nation – and the existing players have gotten a head start in the rollout of 5G-enabled services and features. Another pressure for the new entrant will likely be the already high mobile penetration rate, which reached 151.4% in 2021, partially due to a high multi-SIM ownership.
Future Developments
Technological advancement is crucial for the development of MVNOs. The first market segment explored by this business model was the consumer market and its different niches such as foreign workers and younger users. With the improvement of 5G technology and the internet-ofthings ecosystem, there are more opportunities for MVNOs to position themselves as B2B service providers.
The MVNOs model has also facilitated the integration of new companies into the global telecommunications ecosystem. For example, automotive and logistics companies are utilising MVNOs to offer direct-to-consumer communication services, particularly outside of urban centres, where traditional networks do not reach.
The introduction of MVNOs in Kuwait’s technology market has brought many expansion opportunities, echoing the emphasis on digital innovation and sustainability in the New Kuwait 2035 vision, which aims to drive economic diversification and promote the development of the private sector in the country.
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