Kuwait's QualityNet eyes Middle East expansion

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QualityNet CEO Waleed Saleh Al Qallaf.

QualityNet CEO Waleed Saleh Al Qallaf.

Kuwait’s QualityNet, the Gulf state’s largest internet provider, is looking to expand overseas to Egypt, Saudi Arabia, Qatar and Iraq in a bid to counter slowing growth in its domestic market, its CEO Waleed Saleh Al Qallaf told Arabian Business.

“We are focusing on a major deal in Egypt and a couple of major deals in Saudi Arabia and we are also looking to Qatar, there has not much potential at the moment, we think it is going to boom,” Al Qallaf said, adding that the total value of the deals on the table are worth in the region of approximately $20m.

The company is also putting efforts into expanding into Iraq.

“Today it is for connectivity, not retail, for corporate, mainly oil and gas. We have a partner offering services on the ground so we are putting focus here. We do not have plans in the short-term but Iraq is booming and as soon as it becomes stabilised business will go.”

The move comes as growth in QualityNet’s domestic market begins to slow. Over the last two years, QualityNet’s market share has dropped by five percent to 40 percent of the fixed Internet market and its annual growth rate has dropped from around 12 percent in 2012 to an estimated five or six percent in 2013.

Kuwait is largely a copper-based network, which currently cannot carry sufficient bandwidth to satisfy consumer demand for broadband, which is used by just 5.5 percent of the population, Essa Al-Kooheji, general manager at QualityNet to Reuters.

At present only 15 percent of homes and offices user the faster fibre connection, or Gigabit Passive Optical Network (GPON) as it is known in the industry, but Al Qallaf said government investment will help change this and improve the company’s growth levels.

“There is a plan to expand more. Today about 15 percent of Kuwait is GPON. Clients are happy with the fibre, most clients on copper are having some problems as it is not a stable service," he said in an interview in the company’s headquarters in Kuwait City.

“The [market] growth is single digits; it was estimated to be double digit but it now single. Assuming that everything stays as is, it is not going to improve. But with the plans for GPON, they are now in the pipeline. There are now around 27 areas to go live in GPON in six months, so the more GPON the better the growth,” Al Qallaf said optimistically.

 

Kuwait is one of the region’s most mature Internet markets. In 1992, only months after US-led allied troops forced invading Iraqi soldiers out of the country and restored peace, Kuwait became the first country in the Gulf to establish internet services for its citizens.

QualityNet was only the second internet provider in the country when it was set up in September 1998 after the government sought to privatise the sector and reduce the monopoly of the government-controlled sole operator.

It was set up by a trinity of major players in the region: local conglomerate Ali Alghanim and Sons Industries, telecoms giant Batelco and lender National Bank of Kuwait and competes with rivals FastTelco, KEMS and GulfNet.

Since the 90s, Kuwait has embraced the Internet, growing from 150,000 users in 2000 and a penetration rate of 5.8 percent to around 1.1 million within a decade.

Currently, it has an internet penetration rate of around 74 percent, much more than the UAE (70.9 percent) or Saudi Arabia (49 percent), but just beaten by Bahrain (77 percent) and market leader Qatar (86 percent).

According to data from InternetWorldData.com, Kuwait’s 1.9 million users make up just 2.2 percent of the entire Middle East market of 223.6 million users, which itself only accounts for 3.7 of the global online community.

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