It takes two (or more)

Since competition arrived in Saudi Arabia last year, the kingdom's mobile market has experienced a dramatic overhaul, with both incumbent and newcomer now fighting to attract subscribers through attractive price packages and new services.

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By  Alex Ritman Published  May 17, 2006

|~||~||~|Just look at the Saudi mobile market and you can see the effects of competition. When Etisalat Etihad won the kingdom’s second licence in August 2004, paying roughly US$3.7 billion, Al Jawal, the mobile arm of incumbent operator Saudi Telecom, had just over 8 million users. Following a speedy rollout, the second operator - Mobily - launched on May 25, 2005 and the change was almost instantaneous. In its first 20 days of existence it attracted 250,000 subscribers and by the end of the year was touching on 3 million. It now claims to have over 3.5 million subscribers, and the surge in numbers has earned it the title of fastest growing operator in the region from the GSM Association. But it is not just the country’s penetration rate that has experienced change. The whole view of the mobile market has altered, with the two operators now battling it out to impress new customers and keep hold of current ones through new services and price bundlings. Just a month after launch Mobily introduced its ‘56’ marketing promotion, which gave both prepaid and contract subscribers 56 bundled minutes and text messages a month for calls made between Mobily customers, at no additional cost, for one year. Having built up considerable support, the operator is now looking to services that could boost ARPUs at a time where competition suggests they should be falling. Next month, Mobily hopes to launch 3G services commercially, starting with the major cities such as Riyadh and Jeddah, and expanding out. Given the relatively low broadband penetration in the kingdom, 3G is certainly something that has potential for strong take-up, and by launching 3G early, Mobily may be able to prize some of Al Jawal’s more lucrative enterprise subscribers. But Al Jawal has not remained stagnant since Mobily’s arrival. Its customer base now stands at around 12 million, emphasising that the entrance of competition has boosted the whole market significantly. The incumbent has launched new offerings in a bid to differentiate its own service and retain subscribers in light of an increasing competitive threat. With location-based services, launched a few months ago, subscribers can now find their exact location, the whereabouts of nearby amenities such as banks and petrol stations, and the direction for Muslim prayer, simply by sending a text. Another Al Jawal innovation permits subscribers to have two additional SIM cards with the same mobile number, allowing the subscriber to operate up to three mobile devices that utilise the same number. Al Jawal has announced tariff reductions, with international rates dropping twice in the past 12 months, a ‘friends and family’ pricing offer has been introduced, as has a balance transfer service, allowing post-paid subscribers to transfer airtime to prepaid. A new brand aimed at the youth market is apparently under consideration by the operator, as is the launch of 3G services in the coming months. As the first anniversary of the introduction of competition in Saudi approaches, the rising number of mobile users, decreasing costs and vast array of new services available, highlights the improved market conditions the entrance of an alternative provider has had.||**||

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