THE RISE OF SAUDI ARABIAN TELECOMS: UNRIVALLED PROMISE AND OPPORTUNITY IN A VIBRANT MARKET

 

September 2010

 

Authors		Josep Que - Partner
		Victor Hurtado - Principal
		Gunish Chawla - Manager
		Rui Ferreira - Associate
		Delta Partners Intelligence Unit

 

 

 

 

 

 

 

KEY HIGHLIGHTS

 

 

 

INTRODUCTION

 

 

The story of Saudi Arabia’s phenomenal telecom growth began in 2005 with the liberalisation of the sector. The opening of the telecom market helped the economy at large, by not only acting as a key enabler of the economic growth but also attracting relevant foreign investment. The overall impact has been outstanding both from a customer and business perspective – an ever increasing customer base has enjoyed a wide array of innovative products and services, while at the same time telecom players have posted solid financial results benefiting their large Saudi Arabian shareholder base as well.

 

This white paper provides the Delta Partners perspective about the underlying forces and opportunities that are shaping the next wave of growth in the Saudi Arabian telecom market, and how relevant stakeholders (such as companies, government, regulatory bodies, etc.) can act as enablers and benefit from the opportunities.

 

Fulfilling the promise of Saudi Arabia: Opportunities and implications

Saudi Arabia, with six key promise pillars shaping the next wave of growth opportunities (refer Exhibit 1), is uniquely positioned in the GCC.

 

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1. In the driver's seat: A youth-centric and expatriate consumer generation bolstering demand

 

Saudi Arabia’s population, with around 27 mln people, is the largest in the GCC. The youth and expatriate segments are an influential part of the consumer dynamics, representing a large portion of this base. The youth segment (15-24 years) stands at around 5 mln of the total population, and the expatriate segment is estimated at around 8 mln people (refer Exhibit 2); both segments are by far the largest in size in the GCC.

 

These segments are crucial drivers for telecom products and services. The youth segment is tech-savvy, adopts new products and services, possesses significant purchasing power and could represent high customer lifetime value for telecom players. The expatriate segment will continue to be an important contributor to the economic growth in Saudi Arabia in the coming years and, as such, possesses relevant disposable income to spend. Telecom products and services that enable contact with families and friends abroad form a large part of the expatriate segment’s demand and represent a significant share of revenue for telecom players.

 

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Saudi Arabian telecom players are well-positioned to benefit from this demographic trend, with the youth and expatriate consumer segments fuelling demand for innovative services. This demand is backed up by growing GDP per capita, which is expected to continue to grow at a healthy pace (refer Exhibit 3). Saudi Arabia as a country still spends less on telecom services than several other countries in the region, however, this is expected to change as the telecom market matures – showcasing the Saudi Arabian telecom market potential as compared to other markets. An increase of 0.6pp in telecom revenues contribution to GDP (parity with the average benchmark) would lead to an increase of 2.8 bln dollars in annual telecom revenues in Saudi Arabia (refer Exhibit 3).

 

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Implications for stakeholders

 

Given the vast size and potential of the Saudi Arabian telecom market, and in particular the relevance of the ‘youth’ and ‘expatriate’ segments, industry players need to specifically target these segments. This does not mean creating products or services in isolation, but rather creating a holistic value proposition that fulfils in a unique way their needs. This value proposition should be based on analysis of customer usage and behavioural insights, and should cover varied elements such as what to offer (products and services), where to offer (sales and distribution), at what price (product pricing), which enablers to leverage (devices and content/applications) and how to communicate (branding and communication).

 

Several mobile operators around the world have introduced specific product offerings or MVNOs targeting the ‘youth’ and ‘expatriate’ segments. These specific offerings are widely present in the GCC, developed countries and emerging markets. In the GCC, Orange Jordan has a ‘youth’ package specifically targeting the youth segment with tailored offers such as ‘free talk at university’, ‘mobile internet bundles’ and ‘free SMS’ lines. Oman currently hosts 5 MVNOs offering services for varied segments – for example, Halafoni, an MVNO launched in 2009, targets the youth segment. In developed countries such as the UK, Virgin Mobile offers specific mobile offers for students offering discounts across voice and mobile broadband tariffs. Telecoms group Econet Wireless has taken over the UK MVNO operation of IDT Mobile to launch its own services to African communities. In Germany, E-plus has launched a Turkish focused MVNO targeting the Turkish expatriates by offering them lower international call rates and a call centre in the Turkish language. In emerging markets such as Pakistan, Ufone, has introduced the ‘Uth Package’ specifically for the Pakistani Youth, offering low SMS rates, preferential F&F and off-peak rates, and targeted content services.

 

Content players have a prominent role to play in developing the ‘youth’ and ‘expatriate’ offers. Youth-specific content around social networking, sports, education, celebrity news, etc. need to be relevant to Saudi Arabia and the Middle East region. Expatriate content needs to focus on the main international communities in the country, in particular the Asian and Arab countries.

 

Device players such as Nokia, Samsung, Apple, HTC, etc. need to launch handsets in the market that are aligned with the needs of these segments. Expatriates in Saudi Arabia are at both ends of the spectrum, from the ‘smart phone’ savvy users to ‘low cost handset’ users. Similarly, the youth in Saudi Arabia lean towards the more brand and fashion conscious offers, and therefore, the device players need their products to cater to this need. Device players need to proactively pursue opportunities for partnering with mobile operators and thereby push uptake of newer and more relevant devices into the market.

 

 

2. The internet and broadband surge: Unleashing the growth

 

In Saudi Arabia, there has been a rapid boom in the number of internet and broadband users over the last five years. From 2005 until 2009, the internet user base has almost tripled from 3.9 mln to 10.2 mln users, with the broadband base increasing almost ten-fold from 0.25 mln to 2.3 mln users. The rising trend in the number of internet and broadband users in Saudi Arabia is expected to continue over the next five years with around 4 mln new internet users and 2.7 mln new broadband users expected by 2014 (refer Exhibit 4). The growth in these users can be credited to wider internet access and growth in availability of broadband services, better public awareness and cheaper personal computers.

 

In Saudi Arabia, growth of the broadband market will further boost telecom revenues, making data revenues the main growth driver. This follows the trend of developed markets such as Western Europe, where data has been driving the growth of telecom revenues with voice revenues showing slow or declining growth. In Western Europe, data revenues represented 12% of total telecom revenues in 2008, with this figure expected to rise to 21% by 2014. In comparison, in the Middle East region, data revenues only represented 6% of total telecom revenues in 2008, with this figure expected to rise to 13% by 2014.

 

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Furthermore, lower broadband penetration rates when compared to advanced broadband user peer countries such as Bahrain highlight the potential for growth in the Saudi Arabian broadband market (refer Exhibit 5). In Saudi Arabia, in the past the broadband penetration has not been able to grow as expected due to lack of reliable infrastructure. However, the launch of mobile broadband has been the main enabler to increase penetration across the country, in particular in 2009/2010. The arrival of faster mobile-based (HSPA+) broadband, supported by cutting-edge infrastructure in the country with speeds of 21 Mbps for HSPA+ (trials for 42 Mbps completed), will enable faster broadband growth. Furthermore, increased fixed broadband speeds of 21 Mbps for ADSL service will also boost broadband growth.

 

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Implications for stakeholders

 

Each of the relevant industry stakeholders needs to play a critical role in pushing the broadband penetration and increasing uptake of services to fully realize the potential of broadband in Saudi Arabia.

 

In order to capture the data growth, mobile and fixed operators require heavy investment in advanced data networks. Given the limited infrastructure in fixed networks, mobile operators have taken the initiative in Saudi Arabia to expand mobile broadband networks. One of the key focus areas for mobile operators is to understand the required level of network investment to ensure the ‘equivalent’ fixed broadband customer experience. Speed and capacity are the two key potential issues that mobile operators may face in the future, in particular, with the trend of increasing data usage in Saudi Arabia, especially with offers of unlimited data packages. Another effect of the increasing data usage trend is the additional pressure on returns. Operators need to protect their margins, as unlimited packages, combined with increased surfing speeds and content availability, would lead to a gradual decrease in profit per unit of data consumed that may eventually lower operators’ margins.

 

Fixed operators have the obvious advantage of capacity and speed on their networks when compared to mobile operators. As content and applications that require heavy bandwidth (e.g. IPTV) become more popular, fixed broadband networks will be better positioned. To capitalize on this, fixed operators need to drive the use of their networks as the standard for bandwidth hungry content/applications. A key area of focus for fixed operators is coverage – fixed operators cannot deploy at the same speed as mobile operators, and therefore need to make smart choices in terms of coverage deployment.

 

Equipment vendors/manufacturers also have an important role to play in the current broadband environment. The role of PC manufacturers is critical in providing a boost to broadband growth in Saudi Arabia. An increase in penetration of both desktops and laptops within the Saudi population will contribute to an increase of broadband users. PC manufacturers need to ensure a wide range of choices of PCs and easy access through a vast distribution network. In addition, network equipment manufacturers need to partner closely with the telecom operators in Saudi Arabia on topics such as technology selection (LTE, WIMAX, etc), coverage deployment (urban/rural) and network optimization. Network equipment manufacturers need to proactively suggest to telecom operators the latest technologies and innovations that can be brought to Saudi Arabia.

 

The government of Saudi Arabia launched the National Communications and Information Technology Plan (NCITP) in order to boost economic development and growth. According to a 2009 World Bank report, for every ten percentage points increase in broadband penetration, the GDP growth in developing countries can be expected to increase by 1.38 percentage points. Under the umbrella of the NCITP, the government of Saudi Arabia has launched several projects with the aim of facilitating access to the internet and improving its performance. The role that the government of Saudi Arabia has played so far in increasing broadband penetration has been very encouraging; however, there is scope to play an even more prominent role. In other international markets such as the Republic of Korea and the UK, governments have played a very active role in promoting broadband development. The result has been that the broadband take-up has been much faster than at other leading broadband economies, therefore helping to reduce the digital divide. Complementing the role of the government in Saudi Arabia, it is essential that the regulator also promotes technology neutrality and fair competition within the telecom market. An important part of the regulatory framework is granting operators unbundled access. Local loop unbundling will increase competition and technical innovation through provision of additional operator services.

 

Internet players such as Google can also contribute significantly to the broadband development across the Middle East region. In developed countries such as the United States, Google has launched the ‘Google Fiber for Communities’ project with the aim to build experimental ultra high-speed broadband networks. This project aims to improve internet access and experience by delivering faster internet speeds, facilitating deployment of next generation apps and offering an open access network. Similarly, Google has joined a consortium that will offer internet access to several billion consumers across emerging markets. The project, named O3b Networks, aims to create a gobal internet backbone and is targeting those people for whom internet access is not commercially viable. Projects such as these are mutually beneficial for internet players and consumers. Consumers benefit from access to their content of choice. Internet players benefit from more eye balls on the web leading to additional revenue generation.

 

 

3. The smart device: An integral lifestyle choice

 

For a typical Saudi customer, a consumer product is an extension of the person, and the smart device is no exception to this. Since the arrival of Apple iPhones in Saudi Arabia, the market now has devices such as the Apple iPad and eReaders that are expanding the range of ‘smart’ devices. With enhanced user experience, superior technical capabilities and support for numerous mobile applications and services, smart devices, and in particular smart phones, form a very attractive proposition for customers in Saudi Arabia. Smart phones are an important part of the social fabric in Saudi Arabia, and lend to status and recognition. This characteristic makes smart phones a significant part of the opportunity pie within the telecom arena.

 

The smart phones segment has seen solid growth in sales in 2009 globally, despite the overall decline in global handset sales. The sale of smart phones to end users in Saudi Arabia is expected to jump from 3 Mln units in 2009 to 7 Mln units in 2013. With increasing demand for data services from consumers and increased smart device penetration in Saudi Arabia, data revenues are expected to increase significantly in the coming years.

 

Since the launch of the first Blackberry in Saudi Arabia in 2006 by Mobily, several new models from Research In Motion have made an appearance in the market. 2009 was the year of the first appearance of Apple’s iPhone 3G, again launched by Mobily. Google Android smart phones, currently led by Samsung and HTC products, have also entered the Saudi Arabian market in recent months, stiffening competition to Apple and Research In Motion smart phones. STC, in particular, has launched in the market with HTC magic.

 

 

Implications for stakeholders

 

Consumers are currently paying much more attention to the device as a whole rather than to the network operator (look and feel, content and applications, interface and the brand of the device being the most relevant elements). Due to the shift in the customer’s purchase decision patterns where network loses relevance versus devices and supporting content, device players, mobile operators and software solution providers will need to adapt their strategies to be the preferred choice for customers.

 

Device players have a strategic decision to make in Saudi Arabia: remain hardware-focused or expand into the services market by linking devices to services. Recent global industry trends show a number of device vendors and operating system providers, such as Apple, RIM, Nokia, Palm, Android and Microsoft, creating an ecosystem around devices and services. For the Saudi Arabian telecom market, linking devices to services requires device players to have a clear plan to address potential challenges such as how to manage interaction with customers for services and applications (selection and de-selection of products and services, billing, etc), how to support a strong developer community around the ‘services’ aspect, and what partners to collaborate with (e.g. mobile operators, software solution providers, etc).

 

On the hardware side, device players need to be equally proactive in developing and launching new handset models in Saudi Arabia. Mass-market phones are no longer adequate on their own. With certain segments such as the youth segment exhibiting high social networking usage behaviour, specific feature phones that are Facebook or Twitter friendly could be very relevant in the current context. Additionally, given the relevant size of the Saudi Arabian market, device players could use this market as the main hub for Middle East device launches across multiple segments such as enterprise, SME and low-end (refer Exhibit 6 for range of potential devices).

 

While in developed markets leading mobile operators are considering devices as a core element of the value proposition to drive business goals, in emerging markets operators are starting to evolve from a “do nothing” perspective to considering devices as a relevant strategic element. In Saudi Arabia, mobile operators need a clear device strategy that includes the selection of preferred devices, supporting content and applications, and logistics.

 

With consumer demand for smart phones increasing in Saudi Arabia, mobile operators need to take strategic decisions on their relevant choice of device vendors. Apple and Android-based phones offer two diverse ecosystems in terms of devices and supporting content and applications. Additional players such as Nokia and Microsoft are likely to offer their own ecosystems. Mobile operators need to assess their role and involvement, and adapt their strategies accordingly as the handset becomes a key facilitator of services. Additional decision points for mobile operators include understanding their role in offering device subsidies to increase adoption rates and ensuring an efficient supply chain in delivering these handsets to the end-consumer.

 

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4. Beyond the basic: Innovation in telecom applications and services

 

In recent years, competition within the telecom application market has heated up. From its early origins, where it was mostly the domain of operators with the early portals, it has undergone a notable change with the entry of handset vendors and internet players such as Apple and Google. Consumers now have the benefit of user-friendly devices such the iPhone, fast and reliable 3G connections, and highly relevant content, all of which have contributed to a rise in user activity and acceptance of telecom application and services. There are clear signs of a fundamental shift, with consumers using their mobile phone as a social networking and multi-media device. The outlook for mobile social networking users remains optimistic, with the number of mobile social networking users worldwide expected to reach around 700 mln in 2013 from 140 mln in 2009. This should help drive data and value-added services revenues upwards.

 

Saudi Arabia has been no exception to this trend. There has been significant growth in the number of users of value-added services and the contribution of value-added services to data revenues is estimated to significantly increase reaching 38% in 2014 from 25% in 2010 (refer Exhibit 7).

 

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With the forecasted growth of broadband and the increasing proliferation of smart devices, there is an opportunity for players across the telecom value chain to fill the gap with products and services that meet the Saudi customer’s needs. In Saudi Arabia, the relatively small-sized data market is still dominated broadly by messaging services such as SMS. With a highly competitive voice market, telecom players are looking to expand their offerings of value-added services in order to maintain a steady revenue growth and healthy operating margins. There is room in the market for Middle-East focused Apple-style stores that provide customized content and applications catering to the specific needs of the Middle East customers. Location based services and social networking are expected to post the strongest growth among VAS services in the region, the latter fuelled by the new social networking habits of internet users being moved from fixed to mobile devices. However, entertainment (e.g. music download and streaming) and games (both download and online playing) are expected to remain as the largest slices of the Saudi VAS market in the following years, with Islamic services also showing good potential in Saudi Arabia.

 

 

Implications for stakeholders

 

Players such as Apple and Google have advanced from their more conventional roles into developing a network that brings together hardware, software and content, in particular using content and application stores as the vehicle to link devices to services. The ability of content and application stores to generate sufficient revenues and to be technically compatible across different platforms and devices still needs to be fully demonstrated. However, with the need for industry players to increase differentiation, enhance brand equity and promote customer loyalty, the option to consider content and application stores as part of their strategy either on their own or through collaboration is unavoidable.

 

In an effort to compete with players such as Apple that have built critical mass in the provision of telecom application and services, mobile operators need to be bold and decisive. Traditionally, mobile operators have offered content and applications to subscribers within their own network. Mobile operators increasingly need to consider opportunities enabling them to go to market with applications and content services that are accessible by other operators’ subscribers not just their own network subscribers. This increases the size of the revenue pie for both operators and content players. An example of this strategy comes from the UK, where Vodafone UK has test launched an iPhone web application, which essentially contains a link to a website for iPhone users to download the Vodafone app to their devices, and through which they can then access the Vodafone portal. Once on the Vodafone portal, users can access content from other content providers aggregated by Vodafone, for example, BBC News and CNN. This is an interesting move for Vodafone that has given access to iPhone subscribers across all networks, removing the traditional barrier imposed by an operator’s own network, increasing the intrinsic value of the portal for application / content providers and hence, its own customers.

 

In the world of telecom applications and services, fixed operators hold the edge over mobile operators when it comes to capacity and speed. This becomes relevant for bandwidth hungry applications such as IPTV and data heavy web content. Fixed operators will need to consider investing in such applications and services, and invest in infrastructure required to support these.

 

Recently, there have been some initiatives in the region to make Arabic content available, for example, Rotana as the local TV distributor in Saudi Arabia providing more than 2,000 Arabic movies. However, of the top 20 websites viewed in Saudi Arabia, only 30% are in Arabic with the remaining in English. Saudi Arabia still does not possess the full breadth and depth of Arabic online content, and this provides an ideal opportunity for content players to make a play through provision of specific Arabic content, leveraging on online partnerships where possible.

 

Both the government and regulator can also play an important role in developing the market for telecom applications and services in Saudi Arabia by establishing an enabling environment. This needs to include an appropriate legal framework, e.g. content rights, and foster innovation of applications including local content possibly through the creation of incubators and incentive programs. Additionally, the government can promote Saudi Arabia as the main hub for content and application development within the Middle East, serving as an additional mechanism to generate GDP.

 

 

5. Mobile financial services: Banking at your fingertips

 

Mobile Financial Services (MFS) are getting more and more popular in emerging as well as developed markets around the world. In developed markets, MFS are more prominent as a means to enhance cashless transactions, for example, online shopping and balance enquiries. In Japan, mobile operators such as NTT Docomo offer subscribers a portfolio of mobile financial services such as online shopping, ticketing and finance. Similarly, in the Netherlands, Rabobank delivers to its customers m-banking services such as balance enquiry, loan enquiry, stock price enquiry, electronic transfers, bill payments, arranging overdrafts and automated alerts. In emerging markets, MFS are used more to access financial services previously unavailable, for example, money transfers. Kenya’s Safaricom MFS initiative, M-Pesa, has attracted 11.9 mln users since its launch in 2007. M-Pesa includes functionalities such as person-to-person money transfers, airtime top-up, bill payments, ATM withdrawals and balance enquiries.

 

 

Saudi Arabia has the opportunity to meet both needs:

For the mid-high end society, develop solutions similar to the developed markets for the banked people

For the low end segments of the population, develop solutions for unbanked people

For both, create an ecosystem of services to foster cashless transactions and other advanced services

 

The banked majority of Saudi Arabia’s population profile lends itself to MFS uptake given its degree of sophistication and technological knowledge. Saudi Arabia’s unbanked market exhibits characteristics that are similar to other markets with successful implementations: large expatriate population of Asians of whom the majority are un-banked (as well as a significant percentage of locals). The high Expatriate population is reflected in the value of annual remittance outflows from Saudi Arabia, worth over USD 16 bln in 2007, most of which are being sent to Asia.

 

 

Implications for stakeholders

 

Saudi Arabia is well positioned to implement and capture greater potential from the MFS opportunity compared to other markets. It has a solid foundation with established common electronic platforms (e.g. SADAD payment system). In addition, the market exhibits traits that would facilitate adoption, across both banked and unbanked populations. From the markets that have successfully implemented MFS, a common characteristic emerges – the presence of a strong stakeholder. In the case of Saudi Arabia, there is a strong regulatory body that can act as the driver for the creation of a large enough and standardized ecosystem that is attractive enough for all players. There is a clear opportunity here for the regulator to play the leading role in shaping the MFS industry and supporting frameworks in Saudi Arabia, and the widespread use of MFS, if implemented properly, can bring important benefits to all stakeholders (refer Exhibit 8).

 

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From the perspective of the government, MFS can present very strong benefits through the stimulation of economic and technological development. According to Global Insight, e-payment networks create cost savings of 1% of GDP annually over paper-based systems. Furthermore, increasing share of e-payments by a margin of 10% generates an increase of 0.5% in consumer spending.

 

In a competitive mobile market such as Saudi Arabia, with a large percentage of multiple SIM users, mobile operators are looking to complement and expand current offerings with novel services to differentiate themselves, and mobile banking could play an important role in this differentiation. In the short term, MFS are more likely to be a customer acquisition and retention tool rather than a driver of new operator revenue streams.

 

For banks, MFS could represent several benefits in Saudi Arabia such as access to a larger share of remittance transactions, increased customer base, enhanced market reach with cost efficiency and increased float. The overall MFS proposition could become significantly attractive for banks, especially those with limited reach and smaller subscriber bases.

 

 

6. The connected corporation: Need for sophisticated ICT services

 

According to the IMF, the outlook for Saudi Arabia’s economy is positive as it confronted the global financial crisis handily, with non-oil GDP expected to grow by 4.5% in 2010. A large contributor to this growth has been the business segment, of which Saudi Arabia’s listed companies have a 47% growth rate in their half yearly net income in the first half of 2010, reflecting encouraging prospects for the business environment.

 

As the economy diversifies from a more traditional ‘oil’ based economy to a ‘services’ oriented economy, the business segment will increasingly become more sophisticated in their need for infrastructure, and in particular, ICT services. Businesses will need sophisticated ICT solutions as a driver to improve efficiency and competitiveness.

 

The number of firms in the business segment in Saudi Arabia has increased by 16% over the last five years. With increased investment levels and strong economic growth, the number of businesses is expected to increase by another 11% over the next five years (refer Exhibit 9). The growth is spread across the different sizes of businesses, with SME and Micro enterprises posting outstanding growth, and larger corporations also experiencing good growth.

 

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The business segment’s requirement for ICT services is strongly supported by government initiatives that have boosted the development of the ICT sector. Under the National Communications and Information Technology Plan (NCITP), the government has launched a number of government driven e-projects that require major development of the ICT sector, which is regarded as a national priority. Examples of other significant projects launched by the government that will also contribute to the growth of the ICT sector include the King Abdullah Science Park (KASP), Information & Communications Centre (ITCC) and King Saud University Science Park (KSSP).

 

 

Implications for stakeholders

 

The high demand for ICT services across multiple areas comes at a time when there is a need for simplicity and efficiency in managing sophisticated communication needs, and businesses are looking for ways to outsource non-core areas. Telecom operators need to provide solutions that meet their varied requirements such as:

 

Networking solutions:

Global area networking – seamless, guaranteed international networking services ranging from carrier grade voice quality networking to tier-one internet services

Wide Area Networking – connectivity services across metropolitan, regional, or national boundaries

Local Area Networking – management and maintenance of corporate networks. Associated services include design, implementation, management and security

Unified communications – providing real-time communication services such as instant messaging , presence information, IP telephony (including IP telephony) and integrating them with non-real-time communication services such as e-mail, SMS, fax etc.

Cloud services/computing: offering cloud services/computing with the best solutions for hosting and storage that fit business needs

Data centre and managed services – hosting scalable data centres with accelerated application performance and managing IT resources such as network and applications

Machine to machine (M2M): enabling businesses for whom the machine to machine environment is highly critical, for example, means of payment (terminal point of sale), tele-management (management of fleets), tele-medicine (remote doctors), and tele-maintenance of vending machines

 

The challenge for telecom operators is to invest in the right set of infrastructure capabilities and organization competencies to be able to deliver effectively in the ICT space, essentially a new field for most telecom operators. There is a need for action by the business segment to adopt new technologies as an enabler for a more efficient and competitive organization, and for this purpose the business segment needs to demand from telecom operators cutting-edge ICT solutions.

 

Additionally, equipment and service vendors within the ICT space in Saudi Arabia need to focus on establishing presence, pursuing innovative financing mechanisms for infrastructure investment and partnering with other relevant industry stakeholders to capture market growth.

The government in Saudi Arabia needs to maintain momentum with respect to its agenda of industry diversification by ensuring new businesses are created through government-led initiatives such as free zones, funding, incubators, financing mechanisms, public-private partnerships, promotion of innovation through R&D programs, etc. The government also needs to provide a regulatory framework to foster competition and the emergence of ICT service providers. The scale of implementation of the government ICT initiatives requires exceptional programme management and prioritization of projects by the relevant government organizations.

 

 

Conclusion

 

The Saudi Arabian telecom market due to its vast size and potential is on the radar of most industry stakeholders. In the coming period, the focus needs to be on the creation of an ecosystem that brings together, in a mutually beneficial way, telecom operators, device players, hardware/equipment vendors, software solution providers and content players. The real winners in the Saudi Arabian telecom market will be those who can smartly capitalize on the promise pillars and continuously adapt their chosen strategies to relevant changes in the economic environment, industry context and competitive dynamics. The government can play a vital role in ensuring the creation of Saudi Arabia as a hub for telecom industry innovation and development, both as a mechanism for diversifying the economy and boosting economic growth.