Saudi Arabia: Getting connected

The information and communications technology (ICT) sector has benefitted from rising smartphone sales and expanding broadband reach, but further growth is contingent on infrastructure, particularly the expansion of the nation’s broadband capability and its integration with international networks.

Analysts are warning that without expanding the spectral allocation for mobile broadband operators and harmonising spectrum with the international community, Saudi Arabia could miss an opportunity to reap the benefits of new technology.

Already the region’s largest ICT market, accounting for more than 50% of all ICT investments in the Middle East region according to the Saudi Arabia General Investment Authority, the Kingdom is on track to ramp up spending even further, thanks both to state projects and an increasingly wired up and logged on public.

Information technology spending in the Kingdom is expected to reach $5.7bn by 2014, up from $3.5bn in 2010, according to a recent report by market research firm RNCOS.

The report said that with more than 60% of the Kingdom’s population below the age of 30, spending would be largely driven by its tech-savvy younger generation, supported by the flow of new state projects in fields such as health, education and industry, all of which require high levels of ICT. The country’s commitment to making the maximum number of government services available on line through e-government projects will also require a major investment in ICT hardware and infrastructure.

With mobile broadband take-up continuing to rise, coupled with growing demand for technology such as smartphones and tablets, a study by financial services firm Fitch concluded there is still room for growth in Saudi Arabia’s mobile phone market, despite penetration rates approaching 200%.

The study, issued in early May, noted that the Kingdom’s smartphone penetration rate of 25% was significantly lower than the 47% held by the UAE. It did, however, add that Saudi Arabia’s favourable demographics should be instrumental in closing the gap.

The country could miss out on regional investment opportunities if it doesn’t move to expand its spectrum allocation, however. A study conducted by telecommunications, media and technology market researchers Analysys Mason on behalf of GSMA, a global organisation representing the interests of mobile operators, suggested that the Kingdom could boost its economy by as much as $95.5bn by 2025 if the government releases an internationally-harmonised spectrum in the 800 MHz and 2.6 GHz bands.

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