Executive summary
BuddeComm’s annual publication, Bahrain - Telecoms, Mobile and Broadband, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in Bahrain.
Bahrain is the smallest market in the Middle East by population size but it is also one of the most competitive. It was early to liberalise its market and has a well-established regulatory authority. It is also one of the better-documented markets in the region.
Incumbent Batelco shares the fixed-line market with thirteen other operators providing international calling services using international direct dial, carrier pre-selection or prepaid calling cards. Infrastructure is excellent – Batelco completed the rollout of a Next Generation Network in January 2009. Around 50% of international call minutes originating from fixed lines use prepaid calling cards. Average revenue per minute fell by nearly half over the two years to 2007. Like other Gulf Cooperation Council (GCC) countries, Bahrain has a large expat population (approximately 50% of the total) and this has been the cause of the impact of prepaid VoIP-based calling cards on the market and on Batelco’s international call revenues.
Competition also exists in the broadband market but Batelco has a stronger grip in the sector with around 80% of the retail broadband market. Alternative operators are competing using WiMAX, with subscriber numbers growing strongly in 2008 to reach around 15% market share of the broadband market. Mobile broadband has a similar market share. In mid-2009 Batelco introduced free data roaming for its mobile broadband customers across the GCC, Egypt, Jordan and Yemen.
Batelco and a subsidiary of Zain of Kuwait share the mobile sector, with approximately equal shares of the GSM market. Zain however has a 77% share of the 3G market. A third mobile licence was awarded in January 2009 to STC of Saudi Arabia, the only bidder, with bid of US$231 million and a promise to give 1% of turnover to social development and to set up a US$300 million venture capital fund to develop ICT business in Bahrain and the region.
With mobile penetration apparently well on the way to 200%, there would appear to be little room for a third competitor. As with other high-expat markets however, the population turnover gives room for growth. It was also thought that STC was particularly interested in buying the licence as a defensive move in its home market to prevent the loss of customers to Zain, now operating in both markets, amongst the many subscribers who travel back and forth on the causeway between Bahrain and Saudi Arabia.
With competition strong in its home market, Batelco as with other operators in the region has ventured abroad to less developed markets in search of profits - although not on the scale of Zain or Etisalat of the UAE. Batelco has subsidiaries in Kuwait, Jordan, Yemen and Saudi Arabia and in January 2009 agreed to buy a 49% share in S Tel, a recently established Indian mobile operator, paying US$225 million. S Tel has licences to operate in six Indian states – Bihar, Orissa, Jammu & Kashmir, Himachal Pradesh, North East and Assam – and expects to launch operations in late 2009.