Mid East 'virtual' mobile business worth $5bn

Mid East ‘virtual’ mobile business worth $5bn
(Credit: AME Info)

The Middle East could witness a virtual revolution worth $5bn, which due to increased competition, could bring down the cost of making mobile phone calls throughout the region, according to industry experts.

Mobile Virtual Network Operators (MVNOs) – which provide mobile services to their consumers over the existing infrastructure of licensed operators - have already dramatically changed the telecom landscape in Europe, the US and parts of Asia.

'Now the first MVNOs are being established in the Middle East, putting pressure on regional telecom regulators to open up the market to competition,' said David Hirst, Director of MECOM 2008, the Middle East Communications Exhibition and Conference, taking place from May 26-28 at the Abu Dhabi National Exhibition Centre.

MVNOs don't own the infrastructure but buy bulk time at a discounted rate from licensed mobile network operators and resell to their customers with additional services. One of the best known is Virgin Mobile which operates in six countries, including the UK, the US and South Africa.

For the licensed operator, selling minutes wholesale to a consumer brand with its own marketing budget means it gets new subscribers at no cost and without losing control of the infrastructure.

There are now more than 300 MVNOs across the world and, in some countries their numbers vastly exceed licensed network operators. For example in the US there are 60 MVNOs but only 13 licensed operators. In the UK there are 25 with only five network operators. India is expected to give the green light to virtual networks soon with Tata Teleservices in a franchise deal with Virgin Mobile.

'The first country in the region to establish a legal framework for MVNOs was Jordan with Saudi Arabia's i2 announcing operations recently,' said Hirst. 'Many in the industry are now waiting to see which of the Arabian Gulf countries – with their high mobile penetration rates - will take a lead and introduce this trend-setting business model.'

The total value of the virtual mobile business opportunity in the Middle East region alone could be close to $5bn, a figure that is attracting a lot of interest from investors, according to Dubai-based advisory firm Delta Partners in a report - MVNOs in the Middle East: Threat or Opportunity? - and a participant in MECOM 2008.

'Judging by recent activity, the conclusion from regulators in the Middle East seems to be that MVNOs present an opportunity to benefit consumers while opening up the market to competition without impinging on the country's infrastructure,' said Delta. 'They seem to be more concerned about when the market conditions are right and how to subsequently go about facilitating MVNO entry as opposed to whether they should be introduced at all.'

Among potential investors in Middle East MVNO developments, with multi-billion dollar backing from venture capital, is Dubai-based FRiENDi Mobile, currently in discussions in more than a dozen countries across the region.

FRiENDi, which is also taking part in the MECOM summit, has big ambitions and is expected to announce its first MVNO service soon. 'Our company vision is to become the leading pan-regional access network independent telecom service provider in Asia and Africa,' said CEO Mikkel Vinter.

Saudi-based company, Hits Telecom, has also announced it is looking at virtual mobile operations once regulatory hurdles are removed. In the meantime, it is looking to acquire an MVNO operation in Europe.

MECOM 2008 is being held under the patronage of HH General Sheikh Mohammed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, Deputy Supreme Commander of the UAE Armed Forces and Chairman of the Executive Council of the Emirate of Abu Dhabi.

Now in its second year, MECOM is the region’s premier dedicated exhibition for the telecommunications industry showcasing the best in hardware, software and services related to this dynamic industry sector. MECOM is officially supported by the Telecommunications Regulatory Authority of the UAE and Dubai Internet City.

ICT Industry Partner for the event is Dubai Internet City.

Platinum sponsors are etisalat, the UAE Information and Communication Technology Fund and du. Gold sponsors are Ericsson, Blackberry, EMS and the Abu Dhabi Media Company.


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