Kuwait’s subscriber growth flat in Q3

months of negotiations, Vivendi has agreed to sell its 53.0% stake in Maroc Telecom to Etisalat for 4.2bn euros, subject to regulatory approvals. The deal is expected to close in 1Q14. The acquisition of Maroc Telecom makes sense for Etisalat due to its market, geographic and management profile. Etisalat’s own African operations are likely to be guided through Maroc telecom which has been relatively successful in managing its sub-Saharan African operations.

In positive news for the Bahraini telecom companies, the telecom regulator has awarded radio spectrum for next generation networks to these companies, instead of auctioning new licenses which could have allowed potential new entrants to join the already saturated market. This award will enable the companies to expand their 4GLTE network in Bahrain. Even though the companies in Bahrain have announced the launch of 4GLTE before, spectrum capacity constraints limited their ability to expand.

Omani government which currently has a 70.0% stake in Omantel, is planning to offload 19.0% of its stake in the company. The process is expected to conclude before Dec 31, 2013 according to the Omantel investor presentation. However, whether the sale of stake will be at a premium or a discount is still unknown.

Following are the government objectives as given in the Omantel investor presentation. 1) To further spread the share ownership of individual and institutional investors in the nationally strategic institution 2) Enhance the active and wide spread public participation in the privatization process initiated by the Government. 3) The continued sustained strengthening and enhanced development of Capital Markets in the Sultanate of Oman 4) To increase domestic investment by Local Investors 5) To maximize Shareholder value and proceeds

STC has sold its stake in the Indonesian subsidiary to XL, which is a major operator in the Indonesian market. STC invested heavily to support the operations in Indonesia. However, below than expected performance prompted the company to sell the subsidiary. STC, in its press release, acknowledged the poor performance of the subsidiary in Indonesia where a tough competitive landscape exists due to presence of a large number of operators (10 major operators). STC had an 80.1% direct and 3.725% indirect stake in the company. According to media reports, the transaction valued Axis at an enterprise value of $865mn.

Bahrain

Mobile subscriber growth in Bahrain slowed down to 51,400 in 3Q13 after increasing substantially by 194,600 in 2Q13. The slowdown in growth is understandable considering the high mobile penetration rate in Bahrain. The strong subscriber growth in 2Q13 was apparently due to the Launch of 4G services by Batelco in February 2013.

Batelco continued the lead from the previous quarter by adding 30,300 subscribers in 3Q13, increasing its total mobile subscriber base to 875,000.

Zain subscriber growth slowed down. The company added 11,000 subscribers in 3Q13. On 18th April Zain Bahrain launched its 4G services.

Strong growth in Batelco’s subscribers has pushed up its market share to 40.7% in 3Q13 from 40.3% in 2Q13. Meanwhile, Zain Bahrain market share fell slightly to 35.3% in 3Q13 from 35.7% in 2Q13.

Kuwait

Kuwait’s subscriber base growth remained flat in 3Q13. With a penetration rate of 189.0%, the growth is likely to mirror population growth, going forward. Strong increase in 1Q13 was largely driven by Zain as it launched 4G services to cater for increasing demand for high-speed Internet.

Zain subscriber growth was flat in both 3Q13 and 2Q13 after adding 148,000 subscribers in 1Q13. Strong 1Q was apparently due to subscriber take-up of 4G.

Wataniya Telecom subscribers declined for the third consecutive quarter. Launch of 4G by Wataniya is likely to mitigate the situation in com- ing quarters.

Zain maintained its market share at 42.2%. Meanwhile, Viva increased its market share to 24.2% from 23.6% in 2Q13. The increase in Viva market share has come at the expense of Wataniya which saw its market share go down to 33.6%.

Oman

Oman subscriber base continued to grow at a steady pace increasing by 2.2%QoQ. Oman subscriber base include the Mobile Virtual network operators (MNVO) which are also known as mobile resellers. Total subscribers increased to 5.55mn implying a population penetration rate of 185.0%.

In 3Q13, Omantel’s mobile subscriber base increased by around 61,000 subscribers while Nawras subscriber base increased by 42,000.

However, MNVO growth was lackluster which has driven away the notion that the marginal subscribers are being captured by the resellers.

Omantel market share including the resellers decreased slightly to 58.5%. Excluding the resellers, Omantel’s market share decreased slightly to 48.9%. The movement in subscriber market share is also getting influenced by the ongoing clean-up of subscriber base mandated by the regulator.

Qatar

Mobile subscribers grew strongly again by 3.3%QoQ in 3Q13 to 3.68mn. Despite the high penetration rate of around 170.0%, we believe the potential for growth still remains due to forecasted economic and population growth. Population growth is expected to exceed average GCC growth due to foreign work-force requirement.

Ooredoo extended the growth momentum to 3Q13 by adding 75,600 subscribers. Ooredoo launched 4G services on 16th April 2013.

Vodafone subs. base also kept its growth momentum due to increase in both post-paid and pre-paid segment on the back of 10.0% growth in population.

The erosion in Ooredoo’s market share has slowed down significantly. Ooredoo market share declined slightly to 67.7% in 3Q13 compared to 67.8% in 2Q13.

Saudi Arabia

Saudi cellular subscriber base declined by 1.7%QoQ to 52.1mn in 1Q13. The subscriber base was affected by CITC regulation on sale and activation of pre-paid SIM cards. As a result, the companies have deactivated the unidentified SIM cards which had an effect on their subscriber numbers.

Since STC and Mobily don’t disclose their subscriber numbers, we have derived the numbers by subtracting Zain and Bravo subscribers from CITC subscriber data. Thus, the numbers may differ from the actual numbers.

We have estimated that Mobily and STC subscribers have declined to 20.16mn and 23.49mn in view of the subscriber clean-up effort. It is important to note that these are estimates and may change.

STC remains the market leader with an estimated market share of 45.1% followed by Mobily with a market share of 38.7%. Meanwhile, Zain KSA has managed to increase its market share to 15.9% in 1Q13.

UAE

UAE’s subscriber base carried on with the strong growth momentum increasing by 3.4%QoQ in 3Q13. Subscriber base increased by 4.3%QoQ and 3.9%QoQ in 2Q13 and 1Q13 respectively. With the UAE economy in the recovery phase after the global financial crisis, the mobile subscriber growth is likely to remain steady as population increases on the back of increase in expatriate population.

Etisalat mobile subscriber growth tapered down to 250,000 in 3Q13 to 8.26mn. This follows significant subscriber addition of 590,000 in 2Q13.

Du subscriber base again grew strongly by 242,000 to 6.9mn in 3Q13 after adding just 14,000 subscribers in 2Q13.

Etisalat managed to maintain its market share at 54.5% in 3Q13. Etisalat has indicated that it is not willing to lose its market leader position to DU and thus is likely to resort to aggressive marketing and promotions.