Expats best target for MVNOs in Middle East

Friendi Mobile, the first mobile virtual network operator (MVNO) in the Middle East, was launched yesterday in Oman. A second, Renna, expected to follow shortly.

Friendi and Renna operate through agreements with fixed and mobile incumbent operator Omantel, which has suffered a substantial loss in mobile market share as a result of the rise of second operator, Nawras.

We believe best prospects for the first MVNOs in the Middle East – particularly in the Gulf Cooperation Council (GCC), which comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – is to focus on the large expatriate communities.

There were 12.8 million non-nationals in the GCC states in 2005, accounting for 36% of the total 36 million inhabitants of the GCC, according to the United Nations.

South Asian countries account for the largest numbers of expatriates in the GCC. India is the single largest contributor of expatriates in the

GCC, and there are also sizeable expatriate communities from Bangladesh, Pakistan, the Philippines and Sri Lanka.

There is a clear opportunity for MVNOs in the Middle East to offer the expatriate communities here customised services with features such as call centres in their own language, and value-added services including content offerings that cater for their interests and backgrounds.

Large numbers of people within these groups are also likely to find the offer of discounted calls – both local and international calls – attractive.

Such community-focused services are the second-largest category of MVNOs worldwide, accounting for 20.2% of MVNOs globally in 2007.

The progress of MVNOs in Oman will be closely watched across the region, by operators, regulators and potential MVNOs. Jordan also has advanced legislation for allowing MVNOs, although none of Jordan’s three GSM operators have so far been unwilling to host MVNOs. Bahrain, Israel and Turkey are also discussing legislation to allow MVNOs to enter their markets.

Nevertheless, the MVNO market in the Middle East and Africa region is likely to remain modest in size for some time. According to our research* there will be 2.65 million MVNO and reseller subscriptions in the Middle East and Africa at the end of 2009, rising to 3.77 million at the end of 2013, with South Africa likely to remain the largest single MVNO and reseller market in the region.

The main service approaches taken by MVNOs worldwide fall into the following categories, according to research by Informa Telecoms & Media:

• Discount
• Community/segment-targeted
• Full service, emulating a mobile network operator (MNO) or host network
• Premium service provider (of data and/or entertainment services)
• Converged bundled services or fixed-mobile convergence
• Location-based services
• Enterprise/business-focused
• Advertising

MVNOs also offer an opportunity for companies from other sectors – such as retail – to move into the telecoms services market. In the Middle East, mobile handset and devices are usually sold by independent retailers rather than by the operators. By becoming MVNOs these handset retailers could extend the range of their offerings to include telecoms services, taking advantage of their existing relationship with consumers.

Other retailers, such as supermarkets, have been among the most successful MVNO operators in Europe and that experience could be transferred to the Middle East. The Carrefour and Ikea chains, which both have a presence in the GCC, operate MVNOs in Europe.

* See here www.intelligencecentre.net/mea for more information

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