By Roger Field
Report reveals that majority of broadband subscribers in MEA region will opt for wireless access
Almost 70% of the broadband subscribers in the Middle East and Africa will use wireless networks by 2011, up from about 38% today, according to a report from Dubai based consultants Delta Partners.
While the Middle East and Africa has been the world’s fastest growing region in terms of mobile penetration growth in recent years, fixed penetration has stagnated at 20% in the Middle East and 4% in Africa, leading to a huge pent-up demand for broadband services.
However, the situation is set to change with the arrival of improved international connectivity via new submarine cables and aggressive investments in 3G networks from mobile operators that increasingly view mobile broadband as a growth driver and a means of retaining high value customers.
“We believe that nearly 70% of the broadband subscribers in MEA will in fact be delivered over wireless networks by 2011 up from about 38% today,” said Joao Sousa, partner at Delta Partners.
“This will translate into a significant growth potential for mobile broadband in MEA, with subscribers expected to grow from 2.5 million today to about 40 million in 2011. At a strong ARPU of $10-15 this will represent a market worth around $6 billion in 2011 versus $1 billion today,” he added.
However, the report added that the opportunity is tempered by some significant risks, particularly for late entrants into increasingly cluttered markets. One of the main risks is due to the high CAPEX investments required to deploy mobile broadband networks, and this risk is magnified for late entrants who could “struggle to capture minimum scale in order to recover their investments,” according to the report.
“There are a few success factors operators should consider, such as gaining access to international connectivity at competitive prices, an efficient network operation and developing an effective go-to-market approach,” Sousa said.
“Operators can invest in undersea cable projects to ensure competitiveness, make informed urban/rural rollout decisions and even consider 3G network sharing in some regions. Setting up a dedicated customer care channel and targeted value proposition can also go a long way in ensuring customer development and retention. This is especially important as high value customers in MEA tend to constitute only 10-20% of the subscribers but 50-60% of the revenues,” Sousa added.
Its all down to price if you ask me, if Etisalat roles out a reasonable price plan tomorrow, im sure the 70% growth could be achieved over night relatively speaking.