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11/09/2009

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Bahrain

converged
update



July 2011


Ismail Patel

Research Analyst, GCC

Bahrain converged update, July 2012


Highlights



Socioeconomic conditions



Telecoms
-
market context



Services



Networks



Smartphones, data and messaging, and content and apps



Informa forecasts

3

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

Highlights


The Government has announced the third National Telecommunications Plan, stating that
a fiber NBN and 4G LTE should be deployed in the next three years.



All three mobile operators have trialed and showcased 4G LTE. Licenses are expected to
be issued in 1H13. Operators have launched HSPA+.



Promotional offers in voice, SMS and data dominate the market, especially in the prepaid
segment. In postpaid, Viva launched a high
-
end platinum postpaid plan.



The fixed
-
broadband market is saturated with little room for growth. Alternative operators
consider LLU off Batelco’s network to be too expensive and only Lightspeed has partially
unbundled the incumbent’s network.



Batelco scrapped plans to sell its Bahraini and Jordanian towers, looking instead to share
with rival operators, stating that initial proposal lacked economic sense.

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

Socioeconomic conditions

5

Statistics

4Q11

Population

1,341,510

Population growth rate (%)

2.77

Median age

30

Urban population (%)

Rural population (%)

75

25

Rate of urbanization (%)

1.8

Households

123,730

Country

area (sq km)

765

GDP (US$ bil.)

31.38

GDP per capita (US$)

37,941

Annual GDP growth

(%)

5.44

Notes: GDP statistics are based on purchasing
-
power parity

Sources: Informa Telecoms & Media, IMF, World Bank

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

Telecoms
-
market context


Regulation



Telecoms
-
market overview



Telecoms
-
market financials

6

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

Regulation

Topics

Current status

Regulatory body

Telecommunications Regulatory Authority

(TRA) possesses autonomy
from the government, and is involved in all major telecoms and digital
-
economy decisions
.

Fixed
-
line

infrastructure

Owned and

operated by Batelco; LLU is legislated but only a few
cabinets have been unbundled by Lightspeed. National broadband
network is approved and set to be deployed during the next three
years.

Spectrum

4G licenses to be issued in 1H13.

Also, a license award process for
paired spectrum for 3G+ in the 2.6GHz, and in other frequency bands
used for mobile telecoms later, will occur later this year or in early
-
2013 in two sets: two paired sub
-
bands of 40MHz, which would be
freed by end
-
2012; and an additional 30MHz of paired 2.6GHz
spectrum, freed by end
-
2014

Number portability

Has been in service since 3Q11. In 1Q12, the
TRA stopped Viva
charging

BHD1,500 (US$3,978) for MSNS (Mobile Special Number
Service) customer cancellations as Viva did not get prior approval for
the charge. The TRA said that this charge could potentially impede
the uptake of mobile number portability (MNP).

7

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

Telecoms
-
market overview

8

Statistics

1Q11

4Q11

1Q12

Telecoms connections (mil.)



T潴慬 浯扩le



T潴慬 晩x敤


ㄮ㘰

〮㈳


ㄮ㘹

〮㈴


ㄮ㜲

〮㈴

健湥瑲慴楯渠牡瑥r⠥)



Mobile



Fixed


122.16

185.89


126.25

193.97


127.36

193.97

Leading mobile operator

Batelco

Batelco

Batelco

Leading

fixed
-
broadband operator

Batelco

Batelco

Batelco

Internet users (mil.)

n/a

0.69

n/a

Broadband

users (mil.)



䵯扩le



䙩硥搠


〮㈴

〮㈳


港n

〮㈹


港n

〮㌰

卭慲瑰桯湥a畳敲猠⡭el⸩

〮㜰

〮㜶

〮㜸

T潴慬 浯扩l攠牥癥湵敳
啓␠浩l⸩

ㄸ㐮㜴

㈰ㄮ㠳

㈰ㄮ㐴

Mobile ARPU (US$)

34.21

30.79

30.51

Source: Informa Telecoms & Media

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

Services


Multiplay services and bundling



Voice



Mobile subscriptions by operator and technology



MVNOs


Market overview


Profiles



Broadband



Fixed
-
broadband


Market overview


Providers



Mobile broadband subscriptions by operator and technology



Multichannel TV

9

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

Multiplay services and bundling

Provider

Fixed

broadband

Fixed

voice

TV

Mobile
broadband

Mobile
voice

Wi
-
Fi hot
spots

Batelco

ADSL,
FTTH/B

PSTN,

ISDN

IPTV (over
FTTH/B)

HSPA+

WCDMA

Yes

Mena

Telecom

WiMAX

VoIP

No

No

No

No

Zain

WiMAX

VoIP

No

HSPA+

WCDMA

No

Lightspeed

ADSL

No

No

No

No

No

2 Connect

ADSL

No

No

No

No

No

10




Provider

Maximum FB bundle size

(elements)

Optional extras and discounts

Batelco

Triple (fixed broadband, fixed voice,
TV)

3G+WiFi PS Vita for FBB
customers, paid in instalments

Mena

Telecom

Dual (fixed broadband, fixed voice)

n/a

Zain

Dual (fixed broadband, fixed voice)

n/a

Lightspeed

None

n/a

2 Connect

None

n/a

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

Voice

Voice subscriptions by type, 1Q10
-
1Q12

11

Voice net adds by type, 1Q10
-
1Q12


Mobile subscriptions reached 1.72 million at
end
-
1Q12, representing population
penetration of 127.36%, the lowest in the
GCC and Jordan.



Landlines reached an estimated 241,000 at
the same time, with household penetration
at 194%, the second highest in the region
after Qatar.



Growth in fixed is stagnant as the market is
saturated, whereas the number of mobile
subscriptions continues to grow as multi
-
SIM adoption increases due to promotional
offers.



Whereas there is no suggestion of PSTN
being substituted by mobile, managed VoIP
services (Mena Telecom and Zain) as well
as OTT VoIP services (Skype, etc.) are on
the increase and pose a threat to traditional
landline revenues.

-20
-10
0
10
20
30
40
50
60
70
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
Net additions (000s)

Fixed
Mobile
0.0
0.5
1.0
1.5
2.0
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
Subscriptions (mil.)

Fixed
Mobile
Source: Informa Telecoms & Media

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

Mobile subscriptions by operator and technology

12

Subscriptions

2Q11

3Q11

4Q11

1Q12

Batelco

759,900

752,400

739,000

738,000

Viva

403,100

424,600

446,500

454,000

Zain

467,000

485,010

508,000

528,000

Subscriptions


2Q11

3Q11

4Q11

1Q12

GSM

1,259,550

1,268,390

1,268,150

1,269,660

WCDMA

370,450

393,620

425,500

450,340

By operator

By technology

Source: Informa Telecoms & Media

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

Mobile ARPU trends by service and operator

13


Average ARPU was US$36.41 in 1Q12, an
increase from US$35.79 in the last quarter
and US$35.35 year
-
on
-
year.



The country stands in fourth place in the
Middle Eastern region in ARPU.



Viva has been the strongest performer in
revenues per customer, due to its
concentrated data
-
focused subscriber
base. Batelco follows with its larger
postpaid base, and its increase of
promotional offers in prepaid in comparison
with its rivals.



Informa believes the arrest in ARPU
decline can be achieved once commercial
LTE is launched in the country, with
competition between all three operators.

Mobile ARPU by operator by service category, 1Q12

Source: Informa Telecoms & Media

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

37.81

44.94

27.00

0
5
10
15
20
25
30
35
40
45
50
Batelco
Viva
Zain
ARPU (US$)

Fixed broadband overview

14


Due to its microgeography, there is only a
limited scope for fixed
-
broadband to expand
in Bahrain.



Subscriptions were estimated to have
breached the 300,000 mark in1Q12.



Inform estimates that over one third of these
subscriptions are SMEs. This has had an
effect on household penetration, which stood
at 244% if UN household figures are taken
into consideration.



Net growth is expected to drop rapidly as the
market becomes increasingly saturated.



Faster mobile
-
broadband technologies are
expected to cause some degree of
substitution from fixed, as most fixed data
packages themselves are capped like
mobile.

Fixed
-
broadband subscriptions, 1Q10
-
1Q12

Fixed
-
broadband net adds, 1Q10
-
1Q12


Source: Informa Telecoms & Media

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

0
50
100
150
200
250
300
350
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
Subscriptions (000s)

0
5
10
15
20
25
30
35
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
Net adds (000s)

Fixed
-
broadband networks

Fixed
-
broadband subscriptions by major technologies,
1Q10
-
1Q12

15

Fixed
-
broadband market share by technology, 1Q11 and 1Q12

Fixed
-
broadband net adds by technology,
1Q12 and 1Q11
-
1Q12

Source: Informa Telecoms & Media

0
40
80
120
160
200
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
Subscriptions (000s)

FTTH/B
WiMAX
xDSL

Batelco’s xDSL network continues to be
the largest fixed
-
broadband network by
subscribers, with a market share of 61%.



Mena Telecom and Zain’s WiMAX
networks are growing steadily, targeting
the low
-
end residential market, with a
37.7% market share.



Nuetel first launched FTTH/B in Amwaj
Islands. Batelco started to roll out fiber in
greenfield areas. The proposed NBN will
boost the FTTx market share in Bahrain.

0
10
20
30
40
50
60
FTTH/B
WiMAX
xDSL
Net adds (000s)

1Q12
1Q11-1Q12
FTTH/B

1.2%

WiMAX

37.7%

xDSL

61.1%

1Q12

FTTH/B

0.9%

WiMAX

40.1%

xDSL

59.0%

1Q11

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

Fixed
-
broadband providers

16


Mena Telecom and Lightspeed have been
growing strongly.



All operators, other than Batelco and the two
WiMAX operators, focus on the SME market.



Most service plans are capped. Batelco recently
upgraded its 8Mbps/60GB, 10Mbps/80GB and
16Mbps/100GB to 90GB, 120GB
and 150GB,
respectively. It also raised its minimum “up
-
to”
upload speed to 512Kbps.

Fixed
-
broadband net adds, top five operators, 1Q12 and 1Q11
-
1Q12

Top five providers by fixed
-
broadband
subscriptions, 1Q12

Fixed
-
broadband market share by provider, 1Q12

Source: Informa Telecoms & Media

85,440

74,000

40,000

38,000

24,000

Batelco Bahrain
Mena Telecom
Zain Bahrain
Lightspeed
Communications
2 Connect Bahrain
-5
0
5
10
15
20
25
2 Connect
Bahrain
Batelco
Lightspeed
Mena
Telecom
Zain
Net adds (000s)

1Q12
1Q11-1Q12
2 Connect
Bahrain,
7.9%

Batelco,
28.2%

Lightspeed,
12.6%

Mena
Telecom,
24.5%

Zain
Bahrain,
13.2%

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

Multichannel TV

Multichannel
-
TV subscriptions by platform, 1Q10
-
1Q12

17


Batelco has launched IPTV services in
areas where it has rolled out FTTH. It has
ruled out deploying IPTV over ADSL.



As yet, it is still in its trial phase and offers
are only made directly to household
residents, not publicly. The company will
roll out the service commercially over the
next 2
-
3 years, while it looks for a vendor
with access to content.



DTT is now replacing the analog terrestrial
network. There are an estimated 2,500
households connected to DTT. Analog TV
is expected to be phased out by next year.



There were an estimated 26,800 pay
-
DTH
households. Most of these subscribe to
OSN. The number of free DTH households
is estimated at 156,800.

Multichannel TV subscriptions by provider, 1Q10
-
1Q12

Source: Informa Telecoms & Media

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

0
50
100
150
200
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
Subscriptions (000s)

Cable TV
DTH
DTT
IPTV
0
5
10
15
20
25
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
Subscriptions (000s)

ADMC
ART
Batelco
BRTC
Nuetel
OSN
Networks


Next
-
generation mobile networks



FTTH/B


18

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

Next
-
generation mobile networks

Service

provider

Technology

Status (launch status, coverage, investment,
suppliers)

Batelco, Zain,
Viva

LTE

All operators have trialed and showcased 4G LTE
technology in public.

Details of licenses and commercial
launches will be announced in 1H13.

Zain Bahrain

Femtocells

Small
-
cell mobile solutions provider ip.access has
announced that Zain Bahrain will deploy its nano3G
femtocells and picocells. 2G and 3G small cells will be
for public access, private business and residential
users. Small
-
cell deployments increase network
capacity in urban locations and improve network access
both indoors and in difficult
-
to
-
reach locations.

Mena
Telecom

WiMAX 802.16e

Mena Telecom

a
warded managed services contracts to
Tech Mahindra and Huawei Technologies to upgrade
and manage its nomadic

WiMAX network.

19

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

FTTH/B

FTTH/B subscriptions and net adds, 1Q10
-
1Q12

20


Nuetel still has a monopoly in the man
-
made Amwaj Islands in the north.



Batelco has started to deploy fiber in
greenfield areas, though it has not released
details of its commercial offers public.



The proposed NBN will increase FTTH/B
take
-
up in the next five years.

Top FTTH/B providers by subscriptions, 1Q12


FTTH/B net adds, top providers, 1Q12 and 1Q11
-
1Q12

Source: Informa Telecoms & Media

0
100
200
300
400
500
0
1
2
3
4
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
Net adds

Subcriptions

(000s)

Subscriptions
Net additions
www.informatandm.com

© Informa UK Limited 2012. All rights reserved

2,400

1,200

Batelco
Nuetel
0
200
400
600
800
1,000
Batelco
Nuetel
1Q12
1Q11-1Q12
Data and messaging and content and
apps


Mobile data and messaging


Key developments


Revenues



Operator content and apps

21

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

Development

Key players

Informa viewpoint

Batelco and Jinny
Software partner on
messaging solutions

Batelco, Jinny

Batelco and Jinny Software, a global supplier of
messaging, call completion and mobile
advertising, formed a partnership in which
Batelco will receive a range of messaging
solutions, including an MMSC, a WAP gateway,
VAS upgrades and an Unstructured
Supplementary Service Data (USSD) gateway.

Viva customers move
to e
-
billing


Viva Bahrain

Viva has been encouraging

its
customers to
transfer to e
-
billing since its launch in 3Q11. As
an incentive, customers who signed up for e
-
billing before the end

of
2011 received a 5%
discount on a month’s bill.

Mobile data and messaging:
Key developments

22

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

Mobile data revenues

23

Mobile data revenue by operator, 1Q10
-
1Q12


Data is growing exponentially as it eats into traditional voice and SMS revenues.



Viva is trying to position itself as data
-
oriented. It overtook Zain Bahrain in data revenues
in 2Q11.
Informa

estimates that total operator data revenues reached US$50.4 million in
1Q12, up from US$45.7 million in 4Q11 and US3$1.7 million in 1Q11.



Viva has the advantage of an active parent company, STC, which is rolling out services
that it has tried out in Saudi Arabia to its Bahrain subsidiary.



The battle for sustaining growth is moving into the lower end of the market.

Source: Informa Telecoms & Media

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

0
5
10
15
20
25
30
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
Data revenues (US$ mil.)

Batelco
Viva
Zain
Operator content and apps

Service
provider

Service

Type

Details

Device
availability

Price

Batelco


Samma3ni

Music

Deal with media
group Rotana to
gain rights to
Rotana's music
library. The
“Samma3ni”,
service features
the latest and
most popular
Arabic music

n/a

BHD1 (US$2.65)
per month for 25
tracks of choice
for
postpaid

customers.


For prepaid, there
is a SimSim
Samm3ni Starter
Pack at BHD3,
featuring 50
minutes of free
local calls on
Batelco network,
BHD1 credit and
25 free music
tracks.


24

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

Informa forecasts

25

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© Informa UK Limited 2012. All rights reserved

Fixed
-
broadband forecasts

Broadband subscriptions, 2012
-
2017

26

Fixed
-
broadband market share by technology, 2012 and 2017


The fixed
-
broadband subscriptions base is
expected to reach 511,000 by end
-
2017. The
main factor contributing to this increase will
be the government
-
backed FTTx NBN.



xDSL will be gradually phased out as fiber
becomes more prevalent.



When LTE launches next year, it will put
intense pressure on the WiMAX network in
terms of speeds and value for money.

Source: Informa Telecoms & Media

FTTH/B,
1.8%

WiMAX,
35.4%

xDSL,
62.8%

2012

FTTH/B,
18.2%

WiMAX,
28.0%

xDSL,
53.8%

2017

Fixed
-
broadband subscriptions by technology, 2012
-
2017

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

0
100
200
300
400
500
600
2012
2013
2014
2015
2016
2017
Subscriptions (000s)

0
50
100
150
200
250
300
350
2012
2013
2014
2015
2016
2017
Subscriptions
(000s)

FTTH/B
WiMAX
xDSL
Mobile forecasts by technology and operator

Mobile subscriptions by operator, 2012
-
2017

27

Mobile subscriptions by technology share, 2012
-
2017


3G+ technologies will continue to grow in
the medium term, replacing 2G.



LTE will start to have an impact from 2015.
Bahrain has the advantage of being where
the likes of Zain Group and STC first test
their future technology. Because of this, 4G
developments are expected to materialize
rapidly in this market .



Batelco is expected to maintain its
dominant status. Viva will equal Zain in
overall subscriptions in the long term as it
seeks to attract a wide array of subscribers,
from low
-
end, high
-
end and data
-
hungry
residents.



Based on the UN’s understated population
estimates for Bahrain, mobile penetration of
the population by end
-
2017 will be 285%.

Source: Informa Telecoms & Media

www.informatandm.com

© Informa UK Limited 2012. All rights reserved

0
20
40
60
80
100
2012
2013
2014
2015
2016
2017
Share (%)

GSM
WCDMA
LTE
0.0
0.2
0.4
0.6
0.8
1.0
1.2
2012
2013
2014
2015
2016
2017
Subscriptions (mil.)

Batelco
Viva
Zain
11/09/2009

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Ismail Patel

Research Analyst, Informa Telecoms & Media


E
-
mail:

ismail.patel@informa.com

www.informatandm.com


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