Arab Telecom Markets: Present & Potential

Jawad Abbassi
Founder, General Manager Enterprise Ireland Seminar Dublin, Ireland April 16 2013

Outline

Telecom markets overview Smartphones and smartphone applications E-commerce Entertainment (TV, Social Media and Games)

Arab cellular lines reached 373.9 million by H1 2012

Cellular penetration %
250% 200% 150% 100% 50% 0%
Algeria* Bahrain* Egypt*

Cellular lines (000s)

0 Algeria* Bahrain* Egypt* Iraq* Jordan Kuwait Lebanon* Libya* 8,368 5,221 3,677 11,325 3,622 37,422 5,118 3,295 2,994 54,500 26,486 12,910 12,729 12,745 12,873 26,345 1,915 95,174 20,000 40,000 37,148 60,000 80,000 100,000

99.1% 144.9% 115.7% 78.0% 132.5% 139.0% 81.9% 174.6% 100.9% 115.4% 184.5% 77.9% 173.8% 194.2% 76.7% 59.7% 118.5% 217.0% 53.2%

Iraq* Jordan Kuwait Lebanon* Libya* Mauritania* Morocco Oman Palestine* Qatar Saudi Arabia Sudan Syria Tunisia UAE Yemen*

Mauritania* Morocco Oman Palestine* Qatar

Saudi Arabia Sudan Syria Tunisia UAE Yemen*

*Estimated

Source: Arab Advisors Group

Arab Internet users by June 2012

80% 60%
Internet users penetration % 40% 20% 0% Internet users (000s)

0 Algeria Bahrain Egypt Jordan Kuwait Lebanon Mauritania Morocco Oman Palestine Qatar Saudi Arabia Syria Tunisia UAE Yemen 876 741 573 79 608

5,000

10,000

15,000 11,306

20,000

30.2% 46.0% 18.7% 22.0% 62.9% 32.3% 2.3% 19.8% 31.6% 17.5% 33.3% 50.7% 23.6% 26.5% 56.6% 14.7%

Algeria

Bahrain

Egypt

15,367 1,796 2,364 1,454

Jordan

Kuwait

Lebanon

Mauritania

Morocco

6,434

Oman

Palestine

Qatar

Saudi Arabia

14,218 5,102 2,846 3,324 3,566

Syria

Tunisia

UAE

Yemen

Note: The Arab Advisors Group estimates Internet users based on an Account Usage Multiplier multiplied by the Internet accounts

Source: Arab Advisors Group

The Arab fixed broadband market continued its growth during the third quarter of 2012
Fixed broadband penetration %
20% 15% 10% 5.34% 12.60% 2.5% 4.8% 11.39% 8.85% 5% 0%
1

Fixed broadband accounts (000s)

Algeria* Bahrain* Egypt* Jordan Kuwait* Lebanon* Morocco Oman* Palestine* Qatar 107 173 175 2,250 215 516 968.9625 148 305 428 399 649 169 2,085 500 1,000 1,500 2,000 2,014 2,500

Accounts as % of population

2.0% 3.83% 4.1%

9.50% 7.97% 1.0%

10

11

Saudi Arabia* Syria* Tunisia* UAE* Yemen*

12

13 0.0%

16.26% 0.61%

14

15

*Estimated

Source: Arab Advisors Group

15 Countries in the Arab world commercially launched FTTH services by mid-November 2012

Commercially launched 79%

Algeria Bahrain Egypt Iraq Jordan Kuwait Libya Mauritania Lebanon Morocco

Sudan Oman Palestine Syria Qatar Saudi Arabia Tunisia UAE Yemen

Not Available/ Planned 21%

Source: Arab Advisors Group

Five countries have not yet commercially launched WiMAX services (November 2012)
6 5 5

4 3 3 2 2 1 1 0 0 0 0 0 0 1 1 1 1 1 1 2 2 3 3

Iraq

Syria

Morocco

Mauritania

Palestine

Kuwait

Lebanon

Tunisia

Jordan

Bahrain

Source: Arab Advisors Group

Saudi Arabia

Algeria

Yemen

Oman

Sudan

Qatar

Libya

Egypt

UAE

4 Countries in the Arab world commercially launched LTE services by October 2012

Algeria Bahrain Egypt Iraq Kuwait Jordan Oman Lebanon Libya Mauritania Not Morocco Commercially Palestine launched yet Qatar Saudi Arabia UAE

Commercially launched 21%

79%

Sudan Syria Tunisia Yemen

Source: Arab Advisors Group

39 operators offered 3G/3.5G services in the Arab World by mid-November 2012

Mid November 2012 November 2011

Number of operators offering 3G/3.5G Number of operators that do not offer 3G/3.5G

Number of operators offering 3G/3.5G Number of operators that do not offer 3G/3.5G

39

37
14

16

Source: Arab Advisors Group

Of the countries that have LTE/3G/3.5G services, 11 had mobile TV services by September 2012
Number of operators offering Mobile TV services 3 3

2 2

1 1

Morocco

Jordan

Saudi Arabia

Tunisia

Kuwait

Egypt

Libya

UAE

Source: Arab Advisors Group

Bahrain

Oman

Qatar

The Future is here! At least for mobile operators!

Internet penetration has increased multifold & Internet access through Mobile devices is likely to take precedence.

Operators pain: Bandwidth hungry devices are stressing networks. Data revenues not growing at the same pace of costs. Commoditized data access.
11

Smartphones boom in the Arab World: % of total handsets.

60% 50% 43.7% 40% 30% 20% 10% 0% Saudi Arabia Kuwait UAE Jordan Lebanon Egypt 8.4% 41.6% 37.1%

54.6% 51.3%

Note: Percentages are calculated from the total handsets

Source: Arab Advisors Groups Saudi Smartphone Survey 2011, Kuwait Smartphone Survey 2012, UAE Smartphone Survey 2011, Jordan Smartphone Survey 2011, Lebanon Smartphone Survey 2012, Egypt Smartphone Survey 2012

Smartphone applications annual revenues in Saudi Arabia reached an estimated US$ 45.4 million in 2012
50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Saudi Arabia UAE Egypt Kuwait Jordan 10,107 6,633 2,942 2,093 45,354

Source: Arab Advisors Group

On Smartphones: Social networking is most popular download in UAE, Kuwait, Lebanon & Jordan. Games are most popular in Saudi Arabia
Saudi Arabia UAE Kuwait Lebanon Jordan

120% 100% 80%

67% 96% 82% 81% 70% 60% 61% 55%57% 45% 62% 43% 43% 34% 32% 60% 45% 33% 19%

60% 40% 20% 0% Social networking

36%

Games

Music and audio

Business

Note: Percentages are calculated from the respondents who download applications to their smartphones

Source: Arab Advisors Groups Saudi Smartphone Survey 2011, Jordan Smartphone Survey 2011, Kuwait Smartphone Survey 2012, UAE Smartphone Survey 2011, Lebanon Smartphone Survey 2012

Smartphone Application users in KSA have a higher preference for Arabic language than in UAE and Jordan
Jordan 100% 91.4% 90% 80% 70% 60% 50.0% 50% 40% 30% 20% 10% 0% English Arabic French
Note: Percentages are calculated from the total respondents who use applications on their smartphones

KSA

UAE

90.0%

46.7%

8.2%

8.2% 0.5%

3.3%

1.8%

Source: Arab Advisors Groups Jordan Smartphone Survey 2011, UAE Smartphone Survey 2011, Saudi Smartphone Survey 2011

15

Saudi Arabias annual e-commerce expenditure reached US$ 6.9 billion 2010
e-commerce expenditure (US$ million) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Saudi Egypt Jordan 1,897 6,858

370

Source: Arab Advisors Groups Saudi Internet users and e-commerce survey 2011, Egypt Internet users and Jordan Internet users and e-commerce survey 2012

60% of adult Internet users in Saudi Arabia use e-commerce

70% 60.0% 60% 50% 40% 30% 22.4% 20% 10% 0% Saudi Arabia Egypt Jordan

24.4%

Note: Percentages are calculated from total sample size

Source: Arab Advisors Groups Saudi Arabia Internet users and e-commerce survey 2011, Egypt Internet users and e-commerce survey 2012, Jordan Internet users and e-commerce survey 2012

Annual e-commerce expenditure per ecommerce user in Saudi Arabia, Jordan and Egypt
Annual e-commerce expenditure per e-commerce user (US$) 1,600 1,433 1,400 1,200 1,000 800 600 400 200 0 Saudi
Source: Arab Advisors Group

719

679

Jordan

Egypt

Saudi e-commerce users: Half use it to pay bills online. A third to buy services.
Saudi Arabia 60% 50.1% Egypt Jordan

40% 31.0% 24.0% 20% 14.8% 16.8% 11.4% 12.6% 8.8% 9.7%

0% Buy products online Pay bills online Pay for services online

Note: Percentages are calculated from the total sample size

Source: Arab Advisors Groups Saudi Arabia Internet users and e-commerce survey 2011, Egypt Internet users and e-commerce survey 2012, Jordan Internet users and ecommerce survey 2012

E-commerce expenditure is growing strongly in Jordan

E-commerce expenditure in Jordan (US$ million)
400 350 300 250 200 150 100 50 0 2008 2010 2011 181 192 370

Source: Arab Advisors Groups Jordan Internet users and e-commerce survey 2008, Jordan Internet users and e-commerce survey 2010, Jordan Internet users and e-commerce survey 2012

Supply creates demand? % of banks offering remote banking services in Saudi Arabia & Qatar
Saudi Arabia 100% 83% 80% 82% Qatar

60%

40% 28% 20%

35%

0% Internet banking Mobile banking

Source: Arab Advisors Groups Remote Banking Services in Saudi Arabia, Remote Banking Services in the State of Qatar

Free-To-Air (FTA) satellite TV channels growth

700

104 channels added

642

600
538

500

474

487

400

370

300
200 205

290 263

200
100

155

100

Jan 2004

Jul 2005

Jan 2007

Apr 2010

April 2006

Nov 2005

Aug 2007

Mar 2009

Apr 2011

Oct 2006

Note: The satellite systems included in the analysis are Arabsat, Nilesat and Noorsat

Source: Arab Advisors Groups Satellite TV in the Arab World 2012

Mar 2012

Fully launched FTA satellite TV channels grew by 13% in 11 months

600

64 channels added
565

501

500
448 428

400
344

300
244

200

100

0 October 2006 August 2007 March 2009 April 2010 April 2011 March 2012

Note: The satellite systems included in the analysis are Arabsat, Nilesat and Noorsat

Source: Arab Advisors Groups Satellite TV in the Arab World 2012

A plethora of choice for the Arab TV viewer

25.0%
19.8%

20.0%

15.0%

12.7% 9.9% 9.7% 9.6% 8.7% 8.7% 5.8% 4.8% 3.5% 2.7% 2.3% 0.9% 0.5% 0.2% 0.2%

10.0%

5.0%

0.0%
GeneralGovernment Sector General- Private Sector Promotional Interactive Children and Youth Educational Movies and Series Documentary Specialized General- Mixed ownership Sports Business/ Financial Religious News and Current Affairs Health, Nutrition and Cooking Music

Note: The satellite systems included in the analysis are Arabsat, Nilesat and Noorsat

Source: Arab Advisors Groups Satellite TV in the Arab World 2012

Orbit Showtime Network (OSN) offers the widest base of Pay TV channels

Al Jazeera Sports+, 11.2%

OSN, 69.9% Abu Dhabi Sports, 12.6%

Al Majd, 6.3%

Note: The satellite pay TV operators included in the analysis are OSN, Al Jazeera Sports+, Abu Dhabi Sports and Al Majd

Source: Arab Advisors Groups Satellite Pay TV operators in the Arab World 2012

Facebook dominates social media use amongst Internet users in Egypt & Jordan

Egypt

Jordan

120% 100% 80% 60% 40% 20% 0% Facebook Twitter Hi5 Netlog MySpace Other 52.0% 29.8% 7.7%7.7% 10.1% 5.9% 4.6% 2.8% 2.7% 4.8% 99.9% 99.0%

Note: Percentages are calculated from respondents who socialize through social networking websites

Source: Arab Advisors Groups Egypt Internet users and e-commerce survey 2012, Jordan Internet users and e-commerce survey 2012

Facebook accounts in 17 Arab Countries increased by 50.9% between March 2011 and February 2012, to exceed 36 million
Facebook accounts by March 2011 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Facebook accounts by February 2012

Source: Facebook Estimates, Arab Advisors Group

The Arabic Massively Multiplayer Online (MMO) games market is growing rapidly
Browser-based MMO games 100 90 80 70 60 50 40 30 20 10 0 April 2010 November 2011 40 7 85 10 Client-based MMO games

Source: Arab Advisors Groups Online Games in the Arab World 2012

64.7% of Arabic MMO games were developed in Europe by November 2011

Asia 11.8% America 1.2%

MENA 22.4%

Europe 64.7%

Note: Percentages are calculated from a total of 85 BBMMO games available in Arabic

Source: Arab Advisors Groups Online Games in the Arab World 2012

48.3% of the browser-based MMO games available in Arabic are based on historical or fantasy settings
Other, 10.6%

Modern Warfare, 8.2%

Historical, 27.1%

Sci-Fi/Future, 8.2%

Sports, 8.2%

Fantasy, 21.2% Crime/Mafia, 16.5%

Note: Percentages are calculated from a total of 85 BBMMO games available in Arabic

Source: Arab Advisors Groups Online Games in the Arab World 2012

Key takeaways
A diverse region (Arabic, Urdu, Hindi, English) with solid well established operators Mobile broadband boom is enabling a smartphone boom. wifi off-load is becoming a priority. E-commerce and m-commerce are poised to grow rapidly especially in middle income and rich countries.

See you in Amman in June 2013 at 10th Convergence Summit 2013 500+ executives from all over the region

Arab Advisors Group

Arab Advisors Group provides reliable research, analysis and forecasts of Arab communications, media, technology and financial markets. www.arabadvisors.com For a copy of the presentation, email arabadvisors@arabadvisors.com
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