Kuwait: The Gulf’s first GSM duopoly market proves a success
Following the introduction of a second GSM operator in 2000, GSM penetration in Kuwait almost tripled from 15 percent in 1999 to 42 percent in 2002. The small gulf state’s new level of competition in the GSM market has definitely yielded excellent results, asserts the latest Kuwaiti market report from the Arab Advisors Group.
The success of the privatization and liberalization of the GSM (Global System for Mobile communications) market will boost the government’s drive towards going ahead with privatization in the fixed services telecom segment in the country, the report continues.
Kuwait is a market of some contradiction. Amongst the Arab Gulf countries, Kuwait is the only one with some level of competition in the lucrative GSM market segment. The country has had a GSM duopoly since 2000, which has radically changed the growth dynamics of the market.
However, Kuwait remains the only country in the Gulf whose fixed services segment remains in the hands of the Ministry of Communications alone. Q-Tel, Batelco, and Etisalat are already publicly traded companies in Qatar (1998), Bahrain (1981) and the United Arab Emirates (1979) respectively. In addition Saudi Arabia and Oman have already commercialized their operations into Saudi Telecom Company (1998) and OmanTel (1999).
The report also found that the clear success of the GSM privatization and liberalization initiative is likely to strengthen the government’s arguments for pushing ahead with privatizing the fixed services segment of the market.
“On January 21, 2002, the minister of telecommunications, Sheikh Ahmad Abdullah Al-Sabah, announced that a law for the privatization of fixed line telephone services is likely to pass during the year 2002.” Sami Sunna’, Arab Advisors Group analyst, said. “Given the success in the GSM segment, the Arab Advisors Group expects the bill to face less resistance and a second fixed operator to enter the Kuwaiti market in 2005.” Sunna’ added.
The report projects Kuwait’s PSTN (public switched telephone network) mainlines to grow by a Cumulative Annual Growth Rate (CAGR) of 4.5 percent between 2001 and 2006 to reach 590,000 mainlines by end of 2006, a 25 percent penetration rate. A second fixed line operator is expected in 2005-2006. The new entrant will probably focus on broadband solutions and would need strong backing from another local operator, such as one the GSM operators.
The existing two GSM operators, MTC (Kuwait Mobile Telecommunications Company), and Wataniya, will not only be a boon for future fixed services competition, but have already been a major boon for GSM users in Kuwait. Competition, and the introduction of prepay service by both operators, spurred unprecedented growth in Kuwait’s cellular market.
Mobile services tariffs in Kuwait have declined dramatically and total number of subscribers grew from 335,000—a penetration rate of 15 percent—in 1999 to reach 628,100—a penetration rate of 28 percent—by the end of year 2000, an impressive growth rate of 87.5 percent for that year.
During the year 2001, total cellular subscribers in Kuwait grew by 48 percent from the previous year to reach 930,256 subscribers, with 542,031 subscribers of MTC and 388,225 subscribers of Wataniya. Currently, MTC’s market share amounts to 58 percent with the remaining 42 percent belonging to Wataniya. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
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