The nation is one of the region’s fastest-growing ERP markets, as more businesses realize the benefits of efficient resource management in their internal processes. Manufacturing and trading firms are both seeking efficiencies by transitioning from manual environments to full automation of back- office systems. CRM is another growth area, with fewer than 2% of Seems in the Middle East having a specialized CRM application in place. In 2010, Seems are expected to be a key focus for ERP vendors, as the corporate market for ERP solutions has become saturated. Overall, the I-JAKE benefits from a good regulatory environment and clear government leadership in IT.
Although both dial-up and broadband Internet connections are expected to continue growing over the next five years, broadband growth is expected to outpace the growth of dial-up connections and will likely cause the dial-up sector to enter a period of gradual decline. Price cuts by both Distillates and Du have helped drive growth by making broadband services more affordable, particularly for residential customers. In January 2008, Distillates announced it had completed the first phase of deployment of its fiber-to-the-home (FIFTH) network. Looking ahead, Du and Distillates both plan to launch Woman wireless service which is expected to give the market another major boost.
Telecommunication Sector Overview The I-JAKE is one of the most developed telecommunications market in the ICC with an FIFTH network being rolled out. However, it is the least liberalized with only two operators across all sectors and no foreign investment. All other countries in the region have allowed operators from the region or further field to buy second and/or hired mobile licenses and, in some cases, fixed-line and Internet provision licenses. On the other hand, the I-JAKE market is served by only two operators, which are government-owned, and both of whom operate in all sectors. Du, which was launched in 2007, has gained much ground despite inter-connection difficulties and lack of number portability.
As a step towards reaching this goal, the government has started robust efforts from the grass-roots. The government also recognizes that the CIT sector can facilitate continued economic growth, modernization and competitiveness within the country. The growth will be led by the fact that Bahrain has a validated free-trade agreement with the US, which will boost barter of technology and related expertise. Hence, long- term opportunities in outsourcing for Bahrain in niche areas of software development are rich. Currently, Bargain’s e-Government portal has registered 20 lion hits ever since the national e-Governance scheme was floated in 2007 with portal route so far.
Bahrain has proved to be an ideal testing ground for the introduction of new technologies to the region. Cisco, with its regional headquarters in Bahrain, has been assisting in improving the country’s competitiveness in terms of CIT technology. Bahrain is also host to Microsoft, Hewlett-Packard, Wiper, Tech Maidenhair, Software GAG, Entreat, Autos Origin, Gain (Avoidance), Viva (SST) and Data Consultancy Services. Earlier, in March 2010, Cisco hosted the first Middle East Cisco Networks event in Bahrain and managed to draw over 2,000 CIT professionals from the Middle East, Africa, Europe and Asia. The industry-certified event that was conducted in association with the Bahrain government was proof of the strong bonds between Bahrain and Cisco.
It also brought into focus Bargain’s strategic significance to the CIT industry in the Gulf. As per Internationalist’s. Com, the percentage of Internet penetration in Bahrain was about 55% as at September 2009. This number has shown a 907. 3% Jump in subscriber growth between 2000 and 2009. In 2008, Bargain’s telecoms sector saw a % increase in revenues to USED 803 million compared with the earnings recorded in 2007. The profit Jump came about due too 29% rise in mobile subscribers, a 50% spike in broadband subscribers and another 8% leap in the number of fixed-line users. Competition has accelerated in the broadband market during 2008 and 2009 with the launch of Woman services by two alternative operators.
By mid-2009, Woman had a 30% share of the broadband access market, with the market share of ADDS services falling to 54%. Mobile broadband had a 13% market share after rocketing to 14% in 2008 and then leveling off. Battles shares the fixed-line market with 14 other operators who provide international calling services using international direct dial, carrier pre-selection or prepaid calling cards. Around 70% of international call minutes originating from fixed-lines use prepaid calling cards. Like other ICC countries, Bahrain too has a large expect population (approximately 50% of the total) and this has been the cause of the impact of prepaid Poi-based calling cards on the market and on Battlers international call revenues.
In the mobile market, Battles and a subsidiary of Kuwait-based Gain have recently en Joined by a third operator, Viva Bahrain, owned by SST of Saudi Arabia. Viva Bahrain launched services in March 2010 into a very crowded market. As in other countries in the Gulf, mobile penetration is at stratospheric heights in Bahrain. As with other high expect population markets however, the population turnover gives room for growth. It was also thought that SST was particularly interested in buying the license as a defensive move in its home market to prevent the loss of customers to Gain, which is now operating in both markets, amongst the many subscribers who travel back and forth on the causeway between Bahrain and Saudi Arabia. Qatar becoming an information-based society.
Driven by the opening up of the telecoms market to competition along with a strategic and extensive three-year CIT master plan, Star’s CIT sector is expanding at an enormous pace. With a growth of 24. 5% forecasted for 2011, Qatar has become one of the leading markets for CIT investments. Star’s CIT sector has grown magnificently on the back of heavy spending by the government authorities and companies. This resulted in the implementation of advanced technologies much earlier than in other neighboring ICC countries. For example, Steel completed the deployment of 3. 6 networks in 2007, which significantly increased the penetration of the Internet in 2009.
Consequently, Internet subscribers in the country are forecasted to grow at a CARR of more than 22% during 2010- 2013. The compounded annual growth rate (CARR) for IT spending is forecast at 10%, with opportunities in sectors such as hydrocarbons, banking and telecoms. An expected revival in the manufacturing and construction activity in 2010 should provide a stimulus to IT spending in those sectors. Star’s aggregate IT market is expected to reach USED 550 million by 2014. With IT services spending estimated to grow to USED 51 million by 2014, the next period promises to see more opportunities in sectors such as financial services, healthcare, education and communications.
With this upswing, multinational software vendors continued to find opportunities in the Qatar market in HI 2010, amid signs that the flow of tenders had picked up. In February, GE Intelligent Platforms announced that it had been selected by Qatar Steel to provide a USED 2 million production management solution. Meanwhile, in March, banking software specialist Missy won a contract from Qatar National Bank to implement Missy’s Bankbook’s Equation core banking platform. Qatar was the last country in the region to introduce competition to its telecoms market. In July 2009, Avoidance Qatar launched mobile services, ending the monopoly of all sectors of the market previously enjoyed by incumbent Steel. The consortium led by Avoidance Pl won the second mobile license in December 2007.
A second fixed-line license was also awarded to the Avoidance-led consortium in September 2008. Despite the high mobile penetration in Qatar, a lower percentage of G subscribers than in the I-JAKE offered a chance to Avoidance to target the ever-changing high expatriate population that provides new subscription opportunities. It is worth noting that Avoidance Qatar forayed into a market where mobile penetration was already over 150%. Triple play package of voice, ADDS and PIPIT. Broadband tariffs in Qatar are particularly low (relative to incomes) for the region and broadband penetration on a household level is relatively high, being estimated possibly as high as 60%.
In addition to ADDS services, mobile broadband subscribers are growing. Going forward, ADDS will be the strongest driver of broadband subscription growth, and expects to see an increasing focus on wireless broadband services such as Woman. Furthermore, Steel has begun building a FIFTH National Broadband Network (N.B.), so far only with pilot projects having been completed Saudi Arabia The Kingdom of Saudi Arabia is set to lead ICC countries in CIT spending over the next three years, reaching figures of USED 32 billion. Investment is expected to grow at a three-year CARR of 8%, with the consumer sector accounting for around 50% of spending, followed by energy and utilities at an average of 12%.
Saudi Arabia is the biggest IT market in the ICC, with an estimated market size of USED 3. 3 billion in 2010 and expected to rise to USED 4. 6 billion by 2014. Despite the economic slowdown of last year, the country will continue to be a lucrative market for technology products and services as it invests in upgrading its IT and communications infrastructure. In 2010, Saudi IT spending is forecast to record higher single-digit growth compared with 2009. The Saudi government continues to regard development of IT industries as a national priority and has a strategic objective for the IT industry to raise its contribution to GAP to 20% by 2020, along with increasing broadband penetration to 31% by 2013.
Despite the economic downturn in 2009, Saudi Arabian government bodies pressed head with their ambitious e-government and IT projects. Among major projects, the Medical Services Division (MS) of the Ministry of Defense and Aviation (MOOD) was implementing a nationwide unified medical system. The system aimed to link all 26 MS hospital and 68 medical centers and clinics across six of the country’s regions. The software market value is expected to be USED 611 million in 2010, up from USED 558 million in 2009. The software segment is projected to grow at a CARR of 10% over 2010 – 201 5, driven by an increased focus by Saudi Arabian enterprises on more positivistic solutions.
Oil and gas is the largest software purchasing sector, followed by government and telecoms, but there is a growing interest in solutions in industry verticals like retail, construction and engineering. Furthermore, software-as- a-service (AAAS) business models are expected to provide a growing opportunity for vendors, with increasing demand for industry-specific applications. The Saudi Arabian telecoms market is perhaps the most interesting in the Middle East as it is more competitive with all the big regional players having at least a toehold in the market. Saudi Rabbi’s incumbent SST is the largest telecoms company in the Middle East, measured both by revenue and by market capitalization. It has players from the Middle East – Distillates of the AAU and Gain of Kuwait. Distillates has considerably more than a toehold in the market.
It won the second GSM/ 36 mobile license and, operating as Mobile, now has over one-third of the GSM market and three-quarters of the 36 market. It has also bought Abeyant AH Olla, a major ISP/data communication license holder, and has invested in considerable fiber and Woman infrastructure. Gain won the third GSM/G license in 2007 and launched operations in August 2008. These three giants have been Joined in the market by Battles of Bahrain and Steel of Qatar. Battles is a major investor in a consortium, Tithed Thebe, which has won a fixed-line license. Finally, the remaining large regional player, Steel, has a major share in the small ‘DEN mobile operator, APT, through its Waiting subsidiary.
Mobile broadband and Woman broadband subscribers exceed the number of ADDS subscribers. Internet user penetration is nearly 40% but DSL broadband subscriber penetration is only around 5%. The widespread deployment of wireless broadband outworks by the three new national fixed-line consortia will help to drive increased broadband take-up. Although ADDS connections will play a crucial role in the development of the market, we predict that much of the new growth over the next few years will come from wireless services such as Woman. Mobile and Thebe Telecoms are planning to make extensive use of Woman. Mobile had coverage of 20 cities by early 2010.
It launched a Woman service for residential subscribers branded ‘broadband@home’ in September 2008 at speeds up to mob/s. Mobile is also making an extensive push with mobile broadband and claimed to have ever 1 million mobile broadband subscribers in early 2010. Kuwait Kuwait is the third largest IT market in the ICC region. IT spending is expected to reach around ISSUED MN in 2010 with an expected sluggish recovery in 2010-2013. During 2010-2014, IT spending is expected to grow at a CARR of 7%. Kuwaiti IT market has a number of enduring strengths, including its relatively small but tech- literate and wealthy population, which make Kuwait an important regional testing ground for new products.