Saudi Arabia – Telecom Sector

The mobile sector has become an important component of Saudi Arabia’s telecom industry and contributes around 75% to overall telecoms revenues. The popularity of mobile technology is also driving up Internet usage as Saudi Arabia has a very high mobile phone penetration coupled with a high ownership of smart phones. This has led to a growth in Internet usage in recent years and a rising demand on mobile broadband services.

However, the growth of the mobile sector recently faltered due primarily to a regulatory change. In order to tighten control and security of mobile phone usage and ownership; in early 2016 the Saudi Ministry of Interior began implementing its biometric fingerprinting law. The law was originally passed in September 2015 and requires consumers to supply their fingerprint when purchasing a SIM card, with the information being shared with the National Information Centre. The law resulted in a marked decline in mobile subscribers in 2016, including mobile broadband subscriptions.

Broadband penetration is growing strongly in Saudi Arabia. Broadband is available via ADSL, fibre, and wireless. In 2017 ADSL subscriptions still account for the largest proportion of fixed broadband subscriptions.

Saudi Arabia is on improving its economic strength and diversifying away from its reliance on oil. The government has developed the “Saudi Arabia Vision 2030” program which provides the country with a roadmap of goals and objectives for the future improvement of Saudi Arabia. Supporting the use of digital technologies such as cloud computing and encouraging ICT development feature heavily in Saudi Arabia’s vision for the future.

 Mobile Telecommunications Market :  ​The total number of mobile subscriptions reached around 43.63 million by the end Q2-2017, with population penetration rate of 137%. Prepaid subscriptions constitute the majority (over 78%) of all mobile subscriptions.

Fixed Telephony Market : Fixed telephone lines reached 3.75 million by the end Q2-2017, of which around 1.95 million were residential lines, This represents a household tele density of around 32.9%.

Broadband Services Market : Recently, demand for broadband services has increased significantly compared to previous years, due to the society's need for broadband services, especially after the government strong support for high tech projects which require good digital infrastructure. In addition, many government services are being accessed through e-government transactions. The widespread use of Internet in society is another factor that led to this growth, where the Internet has become a major source of hundreds of thousands of applications that are downloaded to smart devices such as social networking, business applications, text messaging, security tools, games and more. This has driven service providers to provide many broadband packages targeting different user segments.

Fixed Broadband Services : Fixed broadband subscriptions including DSL, fixed wireless (WiMax), FTTx and other fixed lines have decreased to around 3.25 million subscriptions at the end Q2-2017. The Fixed broadband penetration rate stands at about 44.2% of households.

Mobile Broadband Services : The total number of mobile broadband subscriptions decreased and reached around 25.25 million by the end Q2-2017, representing a population penetration rate of 79.6 %. The mobile broadband market also continues to gain momentum in the Kingdom. The key reasons for this include strong competition, the healthy expansion in the use of smart phones, and the offering of various data packages by mobile operators suitable for different user segments. These have led to a dramatic rise in the number of users in recent years, and an increase in the data traffic over these devices, supported by the wide coverage of the 3G and 4G networks.

Internet Services Market : The number of Internet users in the Kingdom continues to rise rapidly, reaching about 24.1 million at the end Q2-2017, with a population penetration of 76%. Increased demand for Internet services and broadband was observed due to high use of social networking applications, video downloading and gaming. Customers are seeking higher speeds and larger packages resulting in heavy data traffic on both mobile and fixed networks. It is expected that the demand for Internet services will continue to increase significantly over the next few years as a result of the availability of high speed fiber-optic networks (FTTx), increased Internet content, and the continued spread of handheld smart devices and applications.