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Saudi immigrant crackdown hits mobile subscriptions

Telcos see 10% reduction in two years

Market research, Operators, Telecoms, IT Business, Mobily (www.mobily.com.sa)

Saudi-Arabia's mobile subscriber base has shrunk by 10% in two years in the wake of an immigrant crackdown, according to a report from Reuters.

In 2011 the kingdom had 56.1m subscriptions, giving it one of the highest mobile penetration rates in the world, but by September 2013 this figure was 51m, according to data from the sector's regulator.

The stricter rules include a reduction in quotas for religious pilgrims and a more stringent pursuit of illegal workers, but the kingdom has also tightened regulations on phone registration.

An estimated 11% of foreign workers left Saudi Arabia from March to November, following enforcement of policies designed to increase the number of employed nationals.

"The clampdown on illegal workers will have had some effect on operators' earnings as people leave the country, but it's likely these were among the lower-spending customers," said Martin Mabbutt, a telecom analyst at HSBC in London.

"We don't know how far through the government is in terms of its drive to remove illegal immigrants from the country."

The kingdom's number-three operator Zain Saudi recorded a deteriorating performance in the fourth quarter as its losses deepened and it missed analysts' projections. Although Mobily announced an 8.6% rise in Q4 profits, this represented its weakest quarterly earnings since 2011 and second-weakest since breaking even in 2006.