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in the Kingdom of Saudi Arabia growth The ICT Sector
1. Mobile Telecommunications Market
The total number of mobile subscriptions reached around 53 million by the
end of 2014, with penetration rate of 171.4%. Prepaid subscriptions constitute the
majority (over 87%) of all mobile subscriptions. The CITC issues a MVNO licenses
by the end of 2014 which will help improve services and costumer care plus the
variation of the provided services, in addition the distribution of the ICT market
will increase and more options for the users will be available.
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2. Fixed Telephony Market
Fixed telephone lines reached 3.62 million by the end of 2014, of which
around 2.53 million or 70% were residential lines. This represents a household
teledensity of around 45 %, while the population teledensity is about 11.8%, it is
noted that the number of subscribtions is decresed due to the comption of the
mobile services in prices and qualty which make it a subtituon of fixed services
plus the Settlement of some unpaid accounts and cancling the accounts of all
expatriates who are leaving the country for good.
0
10
20
30
40
50
60
2008 2009 2010 2011 2012 2013 2014
5.5 6.1 6.3 6.6 7.3 6.9 6.8
30.5 38.7 45.3 47.1 45.7 43.9 45.9
138%
167%
186% 188% 181.6%
169.7% 171.4%
36
45
52
54
53
51 53
Sub
scri
pti
on
s (M
illio
ns)
Mobile Service Market Growth-Total Subscriptions
Post-paid Subscriptions Pre-paid Subscriptions Mobile Penetration (%) Total Subscriptions
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Note: Population teledensity is calculated by dividing the total number of fixed lines by the total population, and household teledensity is
calculated by dividing the total number of residential fixed lines by the total number of households.
3. Broadband Market:
Recently, demand for broadband services has increased significantly compared to previous years, due to the society's need for broadband services, especially after the government strong support for high tech projects which require good digital infrastructure. In addition, many government services are being accessed through e-government transactions. The widespread use of Internet in society is another factor that led to this growth, where the Internet has become a major source of hundreds of thousands of applications that are downloaded to smart devices such as social networking, business applications, text messaging, security tools, games and more. This has driven service providers to provide many broadband packages targeting different user segments.
0
1
2
3
4
5
2008 2009 2010 2011 2012 2013 2014
3.0 3.0 3.1
3.3 3.4 3.3
2.5
1.1 1.17 1.03
1.3 1.44 1.41
1.1
66.8% 65.1% 66.7%
69.3% 67.6%
64.3%
45.0%
15.8% 15.5% 15.0% 16.2% 16.4% 15.7%
11.8%
Tele
ph
on
e L
ines (
Mil
lio
ns)
Residential Lines Business Lines
Household Teledensity (%) Population Teledensity (%)
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4. Fixed Broadband Services:
Fixed broadband subscriptions including DSL, fixed wireless (WiMax), FTTx and
other fixed lines have grown to around 3 million subscriptions at the end 2014.
The Fixed broadband penetration rate stands at about 43.2% of households.
5. Mobile Broadband Services:
The total number of mobile broadband subscriptions continues to increase,
and reached around 29 million by the end 2014, representing a population
penetration rate of 94.5%. The mobile broadband market also continues to gain
momentum in the Kingdom. The key reasons for this growth include strong
competition, the healthy expansion in the use of smart phones, and the offering of
various data packages by mobile operators suitable for different user segments.
These have led to a dramatic rise in the number of users in recent years, and an
increase in the data traffic over these devices, supported by the wide coverage of
the 3G and 4G networks.
0.118 0.258 0.428
1.00
1.30 1.49 1.56 1.87
1.85 1.38
0.2
0.3
0.6
0.8 1.2
1.04
1.44
1.74 1.95
2.54
2.92 3.03
0%
10%
20%
30%
40%
50%
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2008 2009 2010 2011 2012 2013 2014
Pen
etr
ati
on
(%
)
Su
bscri
pti
on
s (
Mil
lio
n)
Leased lines + FTTx ADSL Subscriptions
Fixed Wireless Subscriptions Total Fixed Broadband Subscriptions
Households Penetration (%)
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6. Internet Services :
The number of Internet users in the Kingdom continues to rise rapidly,
reaching about 19.6 million at the end of 2014, with a population penetration of
63.7%. Increased demand for Internet services and broadband was observed due
to high use of social networking applications, video downloading and gaming.
Customers are seeking higher speeds and larger packages resulting in heavy data
traffic on both mobile and fixed networks.
2.70 4.28 4.22 4.59
9.13
7.06 8.07 9.68
19.96
9.7%
39.6% 42.1%
47.6%
94.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
5
10
15
20
25
30
35
2010 2011 2012 2013 2014
Pe
ne
tra
tio
n (
%)
Su
bs
cri
pti
on
s (
Mil
lio
n)
Standard Mobile Subscriptions Dedicated Mobile Data Subscriptions
Total Mobile Broadband Subscriptions Mobile BB Telednsity (of populations)
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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), increased Internet content, and the continued
spread.
9.5 Telecom Services Sector Revenues:
Telecom services revenues from operations in Saudi Arabia reached about SAR
68.18 billion in 2014. Decreased about 4.3% of 2013 due to the reduction of
services price, plus the CITC role in regulating services prices for non-
competitive markets, Mobile revenues represent 77.8% of all telecom sector
revenues, with fixed and data services accounting for the remaining 22.2%..
0
2
4
6
8
10
12
14
16
18
2008 2009 2010 2011 2012 2013 2014
9.3 10.3
11.4
13.6
15.8
16.5
19.6
36%
38%
41%
47.5%
54.1% 55.1%
63.7%
Internet Penetration (%)
Internet Users (Million)
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Figure 17: Telecom Services Sector Revenues
0
10
20
30
40
50
60
70
80
90
100
2008 2009 2010 2011 2012 2013 2014
11.20 13.50 15.50 13.33 15.11 19.61 12.01
38 39 45.11 52.42
55.91 51.70
48.09
49.20 52.50
60.61 65.76
71.03 71.31
60.10
In-Kingdom Revenues Only Wireless Fixed and Data
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10.7 International Internet Bandwidth
The total capacity for international Internet connectivity in 2014 was about
1321 gigabits per second (Gbits/s) compared to 318 Gbits/s in 2010.
0
500
1000
1500
2000
2500
3000
2010 2011 2012 2013 2014
318 440 556 814.2
1321
Gb
ps
International internet bandwidth
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9-1 Telecom Service Prices and Inflation:
The liberalization of the telecommunications sector and the opening of its markets
to competition has led to improved coverage and quality of services, increased
choice of suppliers, in addition to lowering of service prices over the past years. It
is worthy to note that while in recent years the Saudi market has seen a remarkable
rise in goods and services prices, the prices of telecommunications services has
been in continual decline.
The cost of living index in KSA increased by 2.7 percent in 2014 compared to
2013. This is due to the rise in the major expenditure groups of the consumer price
index except for the telecommunications services group which decreased by about
0.1 percent in 2014.
Figure (14) shows that the general cost of living index increased by around 30.1
percent cumulatively over the period 2007-2014, while the prices of telecom
services decreased by around 6.3%. This decline is mainly because of the
accelerating pace of competition in the telecommunications market and the
diversity of promotions offered, which reflected positively on the prices of services.
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9-2 ICT Contribution to the National Economy
The ICT sector plays an important role in the national economy, and can be
measured the extent of its effect on several indicators, including: contributing to the
gross domestic product of the economy, investment in the activity of
Communications and Information Technology, and the size of spending on ICT
services.
9-2-1 Contribution to the National GDP
The growth of capital investment, and the development and expansion and of ICT
networks have significantly contributed to the national gross domestic product
(GDP). This growth has been the result of liberalizing the telecommunications
sector and opening the markets to competition, The deployment of modern
technology and availability of applications have the positive effect of raising the
efficiency of other economic sectors as well. According to CITC estimates, the
contribution of the ICT sector represents around 2.78% of total GDP and has been
rising over the past three years. If, however, the oil and mining sector components
of the GDP are excluded, it is estimated that the ICT contribution to the national
GDP is up to 8%. In addition, the huge investments in infrastructure and networks
currently underway, particularly broadband services, will further enhance the
contribution of telecommunication services in GDP. Studies also show that there is
a direct correlation between the availability of broadband services and the rate of
growth to GDP. It is estimated that a 10% increase in the availability of broadband
services could result in growth in GDP of 1.3%.
The published data indicates that the communications and transport sector is the
fastest growing economic sectors. This sector has achieved a growth of about 6% in
2014, and the average annual growth rate during the past five years (2010-2014) is
about 8.7%.
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8.72%
5.8%
0% 2% 4% 6% 8% 10%
Communication & Transport
Agriculture , Forestry & Fishing
Mining & Quarrying
Manufacturing
Electricity , Gas and Water
Construction
Wholesale & Retail Trade, Restaurants& hotels
Finance , Insurance , Real Estate ' &Business Services
Community , Social & Personal Services
Imputed Bank Services Charge
Producers of Government Services
Total GDP
Source: Central Department of Statistics & Information
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9-2-2 Investments in ICT
The investment environment in the Kingdom is distinguished by the continuous
evolution and high profitability returns to investors with light of the growing
investments taking place in the government and private sector, and with the
recovery of consumer confidence, as well as the growing focus by companies to
enhance their efficiency and support capabilities. The aim of the Kingdom is to
shift to an information society and to become a leader in the field of ICT. The
Kingdom is also looking forward to achieve this by attracting investments that
enhance competitiveness, and help to create quality jobs, and contribute to the
diversification of income sources and technology transfer. The Kingdom is the
largest ICT market by far in (MENA) and this lead Saudi Arabia to
Succeed in its endeavors to become one of the top-ranking economies of the world.
The estimated current capital investment in the ICT sector in the kingdom is
currently more than 30 billion riyals ($ 8 billion), mostly concentrated in
infrastructure projects, particularly fixed and mobile broadband networks, and in
solutions for information security, managed services, and 3rd Platform solutions.
CITC expects that the investments in the sector to increase in the next few years
with the growing demand in the market for telecommunications services and
information technology for broadband services, and data services, and applications
of the 3rd Platform, as well as with the entry of mobile virtual network operators
(MVNOs) to the market. This will undoubtedly lead to enhanced market efficiency
and improve the level of services, and contribute to lowering of prices.
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9-2-3 Spending on ICT Services:
CITC estimates that spending on ICT services was up to SAR 111 billion in 2014,
with a growth rate of about 9% compared to 2013. The telecommunications sector
accounts for the lion's share of spending by 64%, while the proportion of spending
on IT services is about 36%. This scale of expenditure is due to the investment in
infrastructure for the Next generation Networks, and 4G mobile networks, and the
adoption of electronic services (e-government,e-health, e-education, e-commerce,
etc.) as well as spending on information security. It is expected that the
telecommunications market and information technology will continue to grow on a
regular basis, to exceed the size of spending by about 120 billion riyals in 2015.
4.5 5.2 5.8 7 9 14.4
18 21 21.9 22.5 24.8 33
37.29 39.96
13.5 15.7 17.6
21
27
33.6
42
49 51.1 52.5
57.8
61
65.27
71.04
18 21 23.4
28
36
48
60
70 73
75
82.5
94
102.5
111
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
20
40
60
80
100
120
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Spending on Telecommunications Services and Information Technology
IT Telecom Total Spending Annual Growth