Information and Communications Technology (ICT) sector is a major driver of national economic growth. The regulatory frameworks and mechanisms in the Kingdom developed in line with global trends, liberalizing the services markets successfully and creating an effective competitive environment.
Cutting-edge technologies were introduced into the ICT networks, offering a variety of services with increased customer benefits.
According to CITC’s (Communications and Information Technology Commission) estimates, the sector’s contribution to GDP has been rising over the past few years. The sector represented around 2.8 percent of total GDP and 8.7 percent to non-oil GDP in 2014.
However, the quarterly growth of ICT Sector is as under:
Fixed Telephone Market Evolution
The number of operating telephone landlines reached 3.67 million at the end of first quarter 2015, an increase of 1.9 percent on quarterly basis and a decrease of 23.5 percent on year-to-year basis. Around 2.6 million (71 percent of total operating lines) are residential and 1.1 million lines are business. Residential fixed telephone lines grew 4 percent during first quarter of 2015 while it is showing a decrease of 23.5 percent on year-to-year basis. Penetration ratio of telephone landlines to the number of population was 12 percent compared to 16 percent at the same time last year, while the ratio of penetration to houses was 50 percent compared to 65 percent by ending first quarter 2014.
A reduction in the number of subscriptions to fixed services can be noted. This reduction is due to competition from mobile services and the comparability of their prices, as is the case in most countries in the world, where subscribers are counting on mobile as a basic service and a substitute for fixed. In addition, settlement of some unpaid accounts and cancellation of the accounts of expatriates who left the country permanently have contributed to the reduction.
Mobile Service Market
The number of subscriptions to mobile communications services reached 51.8 million at the end of first quarter 2015, reflecting a decrease of 1.7 percent during the quarter and an increase of 4 percent on year-to-year basis. The penetration ratio decreased to 168.7 percent from 171.4 percent three months ago. Prepaid subscriptions constituted the bulk of subscriptions, accounting for 87 percent or 44.9 million from the total.
A reduction in the number of subscribers can be noted in 2012 and 2013 compared to 2011, this was the result of the efforts undertaken to limit the spread of SIMs with unknown IDs.
By the end of first quarter 2015, CITC issued two licenses for Mobile Virtual Network Operator (MVNO) services with a view to promoting competition in the mobile services market, increasing investment in this important sector and enhancing choice for users. In addition, CITC initiated the preparation of necessary documentation for a public consultation on licensing of broadband satellite services with the objective of extending the reach of broadband services, which have become essential for e-based applications, in particular e-government applications, and to meet the needs of individuals and businesses.
Fixed Broadband Services
The number of broadband subscriptions through landlines (DSL, WiMax, optical fiber and other wire lines) went up to 3.195 million at the end of first quarter 2015, with a penetration ratio for houses reaching 45.3 percent. The major change reflects in “Leased Lines + FTTx”, the total leased lines registered are 455 thousand, reflecting an increase of 40.4 percent on year-to-year basis and 6.3 percent on quarterly basis. The fixed wireless subscription increased by 8.3 percent during first quarter 2015 and 30 percent in comparison with the same period last year. On other side the ADSL subscription decreased by 21.3 percent on year-to-year basis, the decrease can be attributed to the shift to mobile data subscription.
Mobile Broadband Services
The total subscriptions to broadband services through mobile lines were 31.81 million by ending first quarter 2015, showing retention of 2.66 million or 9.1 percent on Quarterly basis and 11.47 million addition of new subscriber during one year time (an increase of 56.4 percent).
Standard mobile subscription reached 9.62 million, an increase of 74.9 percent compared to the end of first quarter 2014 while dedicated mobile data subscription increased to 22.19 million from 14.84 million a year ago.
This was mainly attributable to significant improvement in the provision of broadband connections, widespread growth of smartphones and the significant rise in the number of users in recent years. The increase in data traffic using these devices has been supported by extensive 3G and 4G coverage in various regions of the Kingdom. The penetration ratio of broadband services through mobile lines to the population stood at 102.7 percent.
Dedicated mobile data subscription contributes 70 percent in mobile broadband services.
Internet users
The penetration ratio of the Internet in the Kingdom grew to 65 percent at the end of first quarter 2015 from 13 percent in 2005. The increased demand for Internet services and broadband was due to high usage of social networking applications, video downloading and gaming. Customers are seeking higher speeds and larger data packages, resulting in heavy data traffic on both mobile and fixed networks in the last few years. It is expected that the demand for Internet services will continue to increase significantly over the next few years as a result of the availability of high speed fiber-optic networks (FTTx), especially in the larger cities, and the spread of 3G and 4G to in the various regions of the Kingdom, combined with other factors such as increased Internet content, and the spread of smart handheld devices and their applications that rely on Internet connection. Ending first quarter 2015 around 20.1 million users used internet, reflecting an increase of 11 percent on year-to-year basis and 2.6 percent during the quarter.
Telecom Service Prices and Inflation
The liberalization of the telecommunications sector and the opening of its markets to competition led to improve coverage and quality of services, increased choice of suppliers, in addition to lowering of service prices over the past years. It is worthy of note that while in recent years the Saudi market has seen a noticeable rise in goods and services prices, the prices of telecommunications services have been in continual decline. The cost of living index in KSA increased by 2.1 percent in 1st quarter 2015 compared to the first quarter of 2014. This is due to the rise in the major expenditure groups of the consumer price index except for the telecommunications services group which just increased by 0.32 percent in the same period. The general cost of living index increased by around 31.5 percent cumulatively over the period 2007-1Q-2015, while the prices of telecom services decreased by around 6.1%. This decline is mainly due to the accelerating pace of competition in the ICT market and the diversity of promotions offered, which reflected positively on the prices of services.
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