Bahrain Telecommunications Report Q4 2009

BMI's latest update on Bahrain's telecommunications market contains new regulatory data on the size of Bahrain's telecoms market at the end of 2008. It also includes data published by the country's two leading mobile operators, Batelco and Zain Bahrain, which shows how they performed in the first six months of 2009. One notable development in the mobile market has been the shrinkage that has occurred in the number of mobile subscribers, particularly in the second quarter of 2009. By the end of June, Bahrain's mobile subscriber base was 1.5% lower than at the start of the year. The shrinking customer base appears to be the result of moves by both operators to deduct inactive prepaid customers from their respective customer totals.

By the end of June 2009, Bahrain's mobile penetration rate had risen to 141.5%. The high penetration rate points, not only to a multiple SIM ownership trend, but also to a significant number of inactive users. The continuation of a high penetration rate means that we expect further deductions of inactive prepaid customers in the months ahead. In the meantime, we predict that the launch of commercial services by Bahrain's third mobile operator, Saudi Telecom Company, will result in a further stimulus for growth.

By the end of 2009, we predict a market of just over 1.4mn mobile customers and a penetration rate of 147%. We also anticipate strong growth in the number of 3G subscribers, predicting that over 28% of the Bahraini mobile subscriber base will have 3G handsets at the end of 2009. The latest regulatory data shows that recent months have seen significant growth in the number of mobile broadband users.

Meanwhile, in the fixed-line sector, the latest regulatory data shows that the number of fixed-line customers grew by 8.3% in 2008 to surpass 220,000 at the end of the year. It appears that recent fixedline growth has been driven by the deployment of fixed wireless services by alternative operators such as Kalaam Telecom. The sale of fixed wireless services to residential customers has helped to raise the level of household penetration to 78% (from 74% at the end of 2007). The successful deployment of fixed-line services by alternative operators is also contributing to the steady erosion of Batelco's market share.

Alternative operators are also making headway in the fixed broadband sector, which saw growth of over 37% in 2008 and which had a penetration rate of 8.8% at the end of the year. Within Bahrain's broadband market, BMI is predicting an average annual growth rate of over 7% over the next five years. Increased competition in the ISP market has contributed to lower prices and a greater range of service options for consumers. The recent deployment of WiMAX-based broadband networks is also helping to drive growth in the market, creating a viable alternative to fixed ADSL services.