On guard

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Mobily CEO Al Kaf says he is not overly concerned with the entry of additional competition in the Saudi market as he believes it has the capacity to absorb a third player. Mobily has added more than 6 million subscribers and generated almost US$2 billion in revenues in 18 months.

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Saudi Arabia has a mobile penetration rate of about 70%, and one of the highest average revenues per subscriber of around US$35.

The lead-up to the award of Saudi Arabia's third mobile licence has left incumbent mobile operators Al Jawal and Mobily out of the limelight, enabling them to shore up their defences ahead of the entry of a new operator. The fact that the MTC Group, having bid the highest amount for the new licence, is the likely new entrant, is an additional strategic consideration the incumbents will have to take on board given MTC's strong track record of successfully developing networks outside of its domestic market of Kuwait.

Mobily, as the second entrant into Saudi's sprawling mobile market probably has the most to lose from the entrance of a third player, though the company's CEO, Khaled Al Kaf continues to exude a confidence in his company's ability to remain successful and progressive despite the tightening of the competitive landscape. He believes that the convergence between wireless and wireline networks, fixed and mobile environments, is the differentiator that will continue to give Mobily an edge over its latest competitor.

"Looking to the complete convergence concept is important to us," Al Kaf tells CommsMEA. "We are looking to be a differentiated company from the third entrant in Saudi Arabia and we plan to achieve this by providing a fixed-mobile convergence solution. So before the end of the year you will see fixed-mobile substitution services Mobily will launch in order to be a market leader," he adds.

One of the building blocks to Mobily's convergent strategy is its recent application for the fixed line licence, which Saudi Arabia's Communications and Information Technology Commission (CITC) is set to award in 1H07. Last month the CITC confirmed that it had received 10 applications for the fixed line licence (see table) and that in the coming weeks the regulator would study and evaluate the applications to determine the qualified short-listed bidders.

"We submitted the regulation fee regarding the fixed licence, we also submitted our bids for the WiMAX frequency band in order to strengthen our position and provide total mobility with broadband services in kingdom," Al Kaf says. "The fixed line licence will be used for the high end of the consumer market, and the SME market, which requires a high bandwidth fibre network delivering speeds of up to 14Mbps. That is where we will be developing high bandwidth technology, over an IP-based technology, over a MPLS fibre network within the metropolitan cities of Saudi for the business sector."

A copy of Mobily's monthly operational report obtained by CommsMEA, highlights the range of activities and launches the operator is involved in, as the countdown to the arrival of new competition grows nearer. The operator reported 6.45 million subscribers at the end of February 2007, with the number of "3G long-distance video service users reaching approximately 500,000, during the first three months of the launch of the services." Mobily launched 3G in June 2006, and in September went on to introduce BlackBerry.

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