Three’s company

A third mobile operator is about to enter the fray in Bahrain, and with one of the highest mobile penetration rates in the region, operators in the country are focusing on broadband in a bid to boost revenue.

Tags: Batelco Middle East CompanySaudi Telecom CompanyUnited Arab Emirates
  • E-Mail
Three’s company Mena Telecom CEO, Laith Sadiq, says more international links will help to increase the range of services on offer in Bahrain and reduce prices.
More pics ›
By  George Bevir Published  March 7, 2010 Communications Middle East & Africa Logo

The entry of STC-backed Viva into the mobile market in Bahrain will mark a new chapter in the history of the telecom sector in the island Kingdom.

Saudi Telecom (STC), the biggest Arab operator by market value, was the only bidder for Bahrain’s third mobile licence, for which it paid US$230 million at the start of 2009. Since then it has been building its network and preparing for launch, which is expected to happen early this month.

Viva has been pre-registering customers and building up its marketing campaign in anticipation of doing battle with established telcos Batelco and Zain, and Bahrain’s Telecom Regulatory Authority (TRA) has also been preparing for Viva’s entry.

Last month, it announced that Batelco would now be able to set tariffs without seeking prior approval from the TRA, a change that the incumbent has been lobbying for for the past year and a half.

The TRA’s chairman and acting director general, Dr Mohamed Al Amer, confirmed that the change was a result of the imminent arrival of Viva. “With the level of competition increasing in the mobile sector and other market segments it is important that Batelco has adequate flexibility to compete on a level playing field with Zain and also with Viva,” he said.

Between them, Batelco and Zain have managed to amass enough subscribers to push Bahrain’s mobile penetration to among the highest in the Middle East. By the end of September 2009, Bahrain’s mobile penetration rate had risen to 149.4%, up from 141.5% at the end of June. According to research firm Business Monitor International (BMI), the jump in the number of mobiles per head of population reflects continued subscriber growth together with a declining population, which the research firm attributed to the departure of foreign workers from the Kingdom.

By the end of 2009, BMI estimates that Bahrain had just over 1.5 million mobile customers and a penetration rate of nearly 157%. The management of Viva no doubt believe that there is room for further growth, and they will only have to look south, to the UAE, where the penetration rate continues to grow beyond the 200% mark, for evidence that the mobile market can continue to grow in size.

Close ties

When the third mobile licence was awarded, Fahad bin Mushayt, director of mergers and acquisitions at STC, confirmed that the geographical proximity and close trade and tourism ties between the two countries were behind the decision to snap up the licence. Every year, several million people cross the King Fahd causeway that links Bahrain to Saudi Arabia, and analysts have said the licence, together with some favourable roaming deals, would help STC guard against losing customers to rival Zain, which operates in both countries. Bin Mushayt told Reuters that STC wants to acquire a 20% market share over the next ten years from the two existing operators.

The CEO of Batelco, Gert Rieder, accepts that his customers will probably want to try out the new network. “A lot of customers will buy a third Sim card, and they will compare that to the quality and coverage they get with Batelco, but I don’t expect a lot of our customers to completely skip our service and go for the new entrant,” he says.

A key differentiator, according to Rieder, will be Batelco’s well-established fixed line and internet offering. “We are the only full service provider in Bahrain, having both a fixed and mobile network, and you will see us in 2010 focusing on those assets,” he says.

Last month’s decision by the TRA to allow Batelco to set and adjust tariffs without first seeking approval from the regulator will give the operator greater manoeuvrability when it comes to countering deals on mobile offered by its rivals, but Rieder wants more flexibility.

He says Batelco is not yet combining fixed and mobile in one product because it has not got the information it needs from the TRA to bundle across mobile and fixed.

“We definitely believe that’s the future and that customers want combined bundles,” he says. “The next step is even more converged solutions, combining intelligently the network of the fixed and the network of the mobile. That is the future and it is definitely one of our focus areas for the next year to come because that’s one area that we can deliver to our customers.”

Regulator’s reshuffle

Battles between Bahrain’s regulator and Batelco have been widespread and well-publicised. But now that the heads of both organisations have moved on, relations between the regulator and operator could be more conciliatory.

The man widely credited with leading reform of Bahrain’s telecom sector, former head of the telecom regulator, Alan Horne, stepped down from his role at the end of last year, but not before hitting Batelco with its biggest-ever fine for allegedly preventing other operators from accessing the country’s international submarine cable, a charge that Batelco described as “baseless”.

Horne went head-to-head with Batelco group CEO Peter Kaliaropoulos on a range of issues, including the thorny subject of local loop unbundling, which could end the incumbent’s dominance of the fixed line market, but which Batelco insists is unnecessary and uncalled for.

Kaliaropoulos was replaced in his role as CEO of Batelco’s Bahrain operation by Rieder, who is now looking after day-to-day operations in Bahrain, while Kaliaropoulos focuses on group issues. Rieder thinks the reshuffle will have a positive effect.

“With me being new and the regulator having new people on board, I think we will find a way of increased and better dialogue,” he says. “We have communicated this to the TRA and said that we are really interested in having dialogue and they have confirmed they want the same.”

However, the issue of the US$13 million fine has not gone away. The TRA insists that Batelco has refused to allow other licensed operators access to Reliance Globalcom (formerly FLAG Telecom)’s submarine landing station in their building, which the TRA says is unacceptable.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code