BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Telecomunications sector of Kuwait

The biggest developments to occur in the immediate future of Kuwait’s telecoms industry will centre around its 3G market, as growth across the mobile market continues to struggle, with penetration rates already in excess of 100%. The country’s worst performing quarter so far this year was Q306, with just 33,000 net additions over the three months. This came on the back of 124,000 net additions in Q206 and 154,000 net additions in Q106. Despite this, BMI is optimistic that a further 133,000 net additions will be possible in Q406, given that the first and last quarters of the year are traditionally stronger. Furthermore, our estimates of 133,000 additional users, bringing the total to 2.7mn users as of YE06, are in line with previous quarterly growth, all with the exception of Q306. We therefore retain our existing forecasts.

So what are the operators doing to grow business and their revenues? Wataniya has been more active in the NGN sector than market leader MTC. The operator has sought to deploy and expand an HSDPA network, with the help of Nokia, as its rival remains distracted by developments in its overseas units. Indeed, over the three months ended September 2006, MTC’s market share fell from 60.5% to 59.7%, as it reported a 2,000 subscriber net loss over the period. While the operator did not provide a reason for the fall in its customer base in its Q306 earnings release statement, BMI believes that this was a reflection of its diverted attentions. Indeed, the overall tenure of the comments made in its earnings release by its management relate to enhancing its geographic footprint, while its international arm, MTCI, announced it would be seeking to list on the London Stock Exchange (LSE) in 2007, in order to raise cash for its international plans. Having said that, Wataniya is also beginning to focus on its external plans, with its Kuwaiti operations contributing less and less to its overall subscriber base. According to BMI calculations, Q305 saw Wataniya’s Kuwait operations account for 17.8% of total subscriber figures, falling to 11.6% of its entire subscriber base a year later.

However, with the prospect of a third mobile operator entering in 2007, both operators would do well to concentrate on their 3G developments. While this may already be the case for Wataniya, MTC has not been forthcoming. It was hoped that the operator would announce some type of development in this respect, with expectations that by YE06, it would begin offering 3G services. Yet, it does not appear to be in a rush to launch. This may be, as highlighted by Dr Marwan Al Amadi, chief strategy officer of its sister company MTC-Vodafone Bahrain, because the key to the success of 3G in Bahrain and the rest of the region lies in service affordability, handset availability and correct market segmentation. These factors the company may deem are still not present in the Kuwaiti mobile market.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - Business Environment Rankings

Middle East & Africa

Kuwait

Chapter 3 - SWOT Analysis

Kuwait Telecommunications Sector – SWOT

Chapter 4 - Industry Forecast Scenario

Fixed-Line

Table – Kuwait Telecoms Sector – Fixed-line – Historical Data & Forecasts

Internet

Table: Kuwait Telecoms Sector – Internet – Historical Data & Forecasts

Mobile

Table: Kuwait Telecoms Sector – Mobile – Historical Data & Forecasts

Chapter 5 - Macroeconomic Climate

Buoyant Growth

Consumption To Remain Strong

Table: Kuwait Economic Activity

Chapter 6 - Country Snapshot: Kuwait Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Chapter 7 - Competitive Landscape

Market Structure

Table – Key Players: Kuwait Telecoms Markets

Table – Selected Operators Financial Indicators

Key Players

Fixed-Line

Table: Regional Fixed-Line Penetration Overview

Internet

Table: Regional Broadband Penetration Overview

Mobile

Table: Regional Mobile Penetration Overview

Market Data Analysis

Fixed-Line

Internet

Mobile

Table: Kuwait Mobile Market Share (Q306)

Table: Kuwait Mobile Market, Net Additions (mn)

Table: Wataniya Monthly ARPU

3G

Chapter 8 - Industry Developments

Company Profiles

Regional Case Study – Huawei Technologies

Huawei Technologies - Contract Sales (US$bn)

Major Contract Wins For Huawei Technologies in MEA

Operators

Kuwait Telecom

MTC-Vodafone

Wataniya Telecom

Chapter 9 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Chapter 10 - Appendix: Regional Demographic Data

The Long View: Data Over The Economic Cycle (2000-2007)

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Middle East & Africa Telecommunications Reports: Sample of Companies Ranked

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Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of Middle Eastern and African Telecommunications Sources

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BMI's Middle Eastern and African Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include: