Kuwait’s three mobile operators – Zain, Viva and Wataniya – are in the process of upgrading their LTE networks to LTE-A, less than a year after the launch of 4G services in the country.
Here is the country’s current situation on LTE-A:
- Viva announced LTE-A plans in September and is conducting trials for download speeds of up to 1-Gbps. Its vendor is Huawei.
- Zain announced its upgrade in early November, with phase one set to see 100 LTE base stations upgraded. It is also collaborating with Huawei.
- Wataniya, in partnership with Ericsson and Huawei, announced its LTE-A plans a few days ago and says it is waiting for the necessary licenses to offer the service.
According to Informa Telecoms & Media research, Kuwait globally stands at an impressive sixth in LTE penetration rankings. It had 535,700 users as of end-3Q13, equating to 15.9% penetration – far ahead of its GCC [Gulf Cooperation Council] neighbors, such as Saudi Arabia (2.7%) and the UAE (2.6%), even though LTE was launched in these countries back in 2011.
With all three companies competing in 4G for smartphones and dedicated data devices, and with the news that they are already upgrading their networks even further, Kuwait has cemented its position as the regional leader in mobile broadband. In a way, the country has quietly assumed the role that the UAE was enjoying with FTTH some three years ago, just as the focus of telecoms in the region has shifted from fixed lines and FTTH to mobile broadband and LTE.
There are also other reasons why the Kuwaiti market has managed to make greater strides in LTE than its GCC neighbors.
In addition to the relatively even and mature competition (among Zain, STC and Ooredoo, that is – three major regional operator groups), 4G smartphone availability has been a strong point for Kuwait; it has a GDP per capita of $43,800 [€31,962]; and, perhaps most importantly, the country has a neglected fixed-broadband market.
The commercial launch date of LTE-A is unknown, but ultrafast mobile data is expected to launch around mid-2014: The highly competitive nature of the market will not allow for any delays. As LTE-A-enabled handsets enter the market, it is only Kuwait that really stands out to be in any position to offer speeds matching the premium that will be carried by such devices.
Whereas customers – and, to an extent, mobile operators – are emerging as the winners in the introduction of LTE-A, fixed broadband in Kuwait has been experiencing a prolonged slump. The lack of an independent regulator has not served as a disadvantage for mobile operators, but the fact that the Ministry of Communications still owns the fixed network has been very damaging to the progression of fixed-broadband services.
Mobile (broadband) operators have taken advantage of the favorable situation and have capitalized. The country’s fixed-broadband subscription count has wandered between 150,000 and 160,000 for the past two years, with household penetration floating just above 45%, putting the country second-to-last in the GCC. And over the past two years, net additions have averaged at a rate that places Kuwait betweenIraqandAfghanistan. Stagnation in fixed broadband is indicative of fixed-to-mobile substitution, a rare situation for a country with GDP per capita as high as US$43,800.
It should also be noted that Kuwait is the only country in the GCC in which the players are not converged operators, in effect making the mobile sector a true competitor against the fixed-line sector, giving mobile operators every opportunity to proceed without the risk of cannibalization, which converged operators are sensitive to. Still, as mutual competitors, the mobile operators are the greatest threat to each other: the country’s blended ARPU fell below the US$30 mark for the first time, yet it is still second in the region behind Qatar.
The status quo in Kuwait serves to highlight the unique nature of each market in the GCC and wider Middle East region. Mobile broadband in Kuwait has profited from a weak fixed-broadband market, among other things. Though there is no accolade that can retain its shine for too long in the world of telecoms, I would argue that, in terms of wider and regional significance, 2013 is the year in which Kuwait’s overall mobile broadband reputation surpassed the UAE’s fixed-broadband status of 2011.
From a customer’s point of view, Kuwait is probably the closest one can reach to mobile data heaven. And from an operator’s point of view, if post-4G innovation is going to happen any time soon in the Middle East, Kuwait is where all eyes should be fixed, with due deference to Saudi Arabia, Qatar and the UAE
Ismail Patel is a research analyst with Informa Telecoms & Media. For more information, visit www.informatandm.com