Executive summary
Kuwait is one of the wealthier members of the GCC, ranking third in GDP per capita behind Qatar and the UAE. The vast majority of its government income is derived from oil revenues. Like the other smaller GCC members, it has a very high expatriate population, forming at least two-thirds of the whole. As in other similar countries, this makes its total population very fluid and thus all penetration statistics very unreliable and distorted.
Kuwait’s telecoms industry is something of an anachronism in the region due to the lack of liberalisation of the market. Not only does Kuwait not have an independent regulator, the Ministry of Communications is both the regulatory entity and also the operating entity for fixed-line services. Plans were drafted for the establishment of a telecommunications regulatory authority in 2007 but have yet to come to fruition.
The Ministry does not charge customers for calls made from fixed lines to mobile phones. It also controls the international gateway and does not have an interconnection system with any of the mobile operators. As the Ministry controls all international charges, this prevents local mobile operators from offering promotions and discounts on overseas calls. It has also preventing mobile operator Zain from extending its ‘One Network’ service, which gives free voice and data roaming for subscribers across most of its network, to its subscribers in its home base of Kuwait.
A further problem with the lack of independence and corporatisation in the fixed-line sector is a lack of available information on the sector.
Competition does exist in the Internet provision sector, with four major ISPs, but again it is limited. In July 2009 the Ministry of Communications stated that it would suspend the licences of a number of ISPs who had begun providing WiMAX services. The Ministry said it was preparing to submit a fresh tender for wireless Internet and WiMAX services.
Kuwait’s mobile sector presents a different picture to its fixed-lines sector. For many years two very strong operators have shared a comfortable duopoly. They have enjoyed high tariffs in their home market and have used this base to extend internationally. MTC, known as Zain, had extended its operations to 24 countries by mid-2009. However, its profits from its Kuwaiti operations still made up around 50% of its total Group profit at end-2008. In March 2010 it sold its African operations, with the exception of those in Sudan and Morocco, to Bharti Airtel of India, leaving it with operations in just 9 countries.
Zain’s competitor Wataniya, now a subsidiary itself of Qtel of Qatar, has extended into six countries in total but its Kuwaiti profits were slightly higher than its Group profits at end-2009.
The two incumbent mobile operators, who have shared the market for the past ten years, were joined in December 2008 by a third operator, Kuwait Telecom Company – known as Viva, with Saudi Telecom Company as a major investor. All three mobile operators have the government as a major shareholder, owning approximately 25% in each case.
By end-2009 Viva would appear to have gained a market share of over 10%. Based on numbers reported by Zain and Wataniya, Viva’s gain would appear to have come mostly at Zain’s expense. The introduction of more competition has had a substantial effect on reducing ARPU levels.