Kuwaiti telecoms industry on cusp of service expansion

KuwaitICT

Economic News

14 Jul 2017
Text size +-
Recommend

The telecoms sector in Kuwait has maintained steady growth in recent months, with profits rising on the back of robust demand for mobile broadband and data services.

In June National Bank of Kuwait (NBK) reported that profits from the telecoms sector hit KD60.8m ($200.4m) in the first quarter of the year, representing growth of 5.8% year-on-year (y-o-y) and 13% of the total profits of exchange-listed companies, according to Boursa Kuwait figures. In addition, annual net profits for listed telecoms firms rose 9% last year – equivalent to 16% of total profits – reaching KD238m ($784.5m).

Indeed, the sector has shown rapid expansion in recent years, achieving 100% fixed-line coverage and a mobile penetration rate of 240%, with 8.72m subscriptions, according to the “Consolidated Kuwait National ICT Indicators” report for 2016 from the Central Agency for Information Technology (CAIT).

Technological adoption rising rapidly

Internet adoption, particularly via mobile broadband, has skyrocketed since 3G services were first tested in 2005, with CAIT reporting last year that Kuwait had achieved 100% mobile network coverage, while 4G/LTE service coverage stood at 97%.

CAIT figures also suggest that Kuwaitis prefer mobile and mobile broadband services to fixed connections. As evidence of this, there were 840,000 dedicated mobile data subscribers as of last year, double the number of fixed internet subscriptions, while smartphones were found in 99.7% of households.

By comparison, CAIT found that just 60% of households had access to a computer or tablet, with only 28% of homes reporting that every resident had used a computer over the previous 12 months.

Next-generation investment to support ICT growth

With the majority of Kuwaitis reliant on their mobile phones for internet access, and as the country approaches 100% 4G/LTE coverage, telecoms operators are increasingly shifting their focus to commercially deploying next-generation 5G services.

One such move gained ground in April, when Viva Kuwait – a subsidiary of Saudi Telecom Company – reported it had successfully conducted a 5G-network technology test in its lab, achieving data speeds of close to 35 Gbps. The company also highlighted that 5G could support higher capacity and improved latency over existing systems, allowing for a higher density of users in urban areas and potentially enabling the expansion of internet-of-things applications.  

Although Viva’s net profits dropped 7% to KD40m ($131.8m) last year, net profits rose 2% y-o-y in the first quarter of this year to hit KD10m ($32.9m).

Meanwhile, Kuwait-based Zain Group is also moving towards rolling out 5G, having successfully tested the Middle East’s first 4.5G mobile broadband technology in partnership with China’s Huawei in December 2015. In December of last year, the company announced that it had partnered with Sweden’s Ericsson, which provides network management for businesses and telecoms infrastructure, to evaluate the performance and applicability of 5G technology.

Internet of things

Zain could use its potential 5G network to support revenue growth through internet-of-things applications – an area the firm started exploring in May when it inked a development, management and operation agreement with the Ministry of Electricity and Water to create an interconnected support network for the ministry’s Smart Meters System.

The KD22m ($72.5m) project will see Zain build and install 880,000 smart meters, initially at properties in industrial and agricultural sectors, with the possibility of expanding to 1.2m in total. As part of the agreement, Zain will also operate and manage the smart meters for five years, following their completed installation in 2019.

Zain Group reported a 3% increase in earnings before interest, taxes, depreciation and amortisation (EBITDA) last year to KD512m ($1.6m), while net income rose 2% to KD157m ($517.6m). Data revenues increased 6% y-o-y over the same period and now comprise 23% of the company’s total revenue base. Although EBITDA fell 13% y-o-y to KD107m ($352.8m) in the first quarter of 2017, this was attributed to foreign currency losses in Sudan, as well as rising operational costs for network expansion and upgrades.

On the back of this progress from some of Kuwait’s key telecoms players, ongoing investment in next-generation services should enable firms to enhance and diversify revenue streams, helping to further cement the sector’s position as an important non-oil growth driver.

Read Next:

In Kuwait

Reforms to Kuwait’s health sector aim to reduce expenditure in face of...

As part of the New Kuwait 2035 development strategy unveiled in January, cost-cutting measures have begun to take hold in the health sector.

In ICT

Blockchain initiative drives Dubai’s fintech development

The Dubai Land Department (DLD) has become the world’s first government agency to adopt blockchain technology for all of its transactions, with the development part of the emirate’s plans to...

Latest

Lee Ark Boon, CEO, International Enterprise Singapore

What do you think is driving the growing infrastructure gaps throughout emerging and developing economies in Asia?