With connectivity widely recognised as a key driver of the post-Covid-19 economic recovery, the GCC countries are poised to expand their 5G networks and in turn increase the value of the region’s ICT industry.
5G in the GCC
Kuwait’s 5G strategy is part of the wider digital ambitions laid out in New Kuwait 2035 of accelerating digital development to attract foreign investment, laying the foundations of a sustainable economy and stimulating domestic growth. Kuwait launched its commercially available 5G coverage in June 2019, achieving nationwide coverage with over 6000 5G sites covering 98% of areas. There were more than 1.2m 5G users in the country at the end of 2021, with 5G penetration at around 25%.
Other GCC members have also turned their attention to expanding their 5G coverage. In a recent report Ericsson anticipated that 5G would account for 73% of all mobile subscriptions in the GCC by 2026, making it the world’s second-highest 5G market penetration.
The UAE unveiled its Industry 4.0 initiative in October 2021, which aims to increase innovation and productivity, lower the industrial sector’s carbon footprint and add some Dh25bn ($6.8bn) to the economy by 2031. The plan is to leverage Fourth Industrial Revolution technologies such as automation, additive manufacturing, blockchain, artificial intelligence (AI) and the internet of things. The UAE already boasts the world’s fastest mobile network and the GCC’s fastest fixed network, and there are plans to expand the country’s 5G coverage through a partnership between Abu Dhabi-based Etisalat and Swedish multinational Ericsson.
Smart agriculture may also benefit from 5G. Industrial farmers in Al Ain in Abu Dhabi are keen to bolster digitalisation by using more remote sensors and robotics. This is one way 5G can make industry in the region more sustainable and productive. “Increasingly clients want to feel they are part of sustainability efforts, and that these efforts lead to tangible realities. In this regard, 5G can be a key enabler, thanks to the decentralised control and monitoring it can provide across facilities and systems,” Feras Albanyan, CEO of real estate development company AQALAT, told OBG.
In Saudi Arabia, telecoms and tech companies invest on average between $3bn and $4bn per year in digital fibre and 5G networks and services, with the Kingdom’s 5G coverage exceeding 70% as of the end of 2021. The digital transformation of government, finance and oil operations is increasing the ICT sector’s value.
Bahrain achieved full nationwide 5G coverage in January 2021, supporting the expansion of the digital economy. Elsewhere, Saudi Arabia’s Salam – known as the Integrated Telecom Company until June 2021 – is engaged in expanding 5G and fibre-to-the-home, in line with Vision 2030’s digital transformation plans.
“As increasing numbers of devices are plugged into 5G networks, enhanced connectivity and higher speeds will generate an enormous wealth of data. This will lead to new insights and functionalities through AI-powered analytics and cloud services,” Essam Alshiha, CEO of Saudi Business Machines, told OBG.
Despite the momentum, there are unknowns around a wholesale 5G rollout. “5G is far superior to 4G, but operators are often trapped by a purely marketing-driven approach to investments in 5G,” Osama Al Dosary, CEO of Salam, told OBG. “The fear of telecoms services being perceived as utilities generates enormous pressure on operators to seek ways to differentiate themselves. Yet it is important to prevent a disconnect between marketing discourse over what 5G means in terms of added functionalities and the real return on investment.”
Another challenge 5G operators could face is the expense and scale of building the necessary ICT infrastructure and supplying global coverage. While it remains to be seen whether 5G faces such an issue in the GCC, the region is already a world leader in terms of internet usage. At the end of 2020 it had the highest average monthly data traffic per smartphone globally.