Although total mobile and fixed services revenues declined in 2014, the Saudi Arabian telecoms and enterprise IT market remains the largest in the Middle East and Africa region (MEA), with ample opportunities for technology start-ups, finds a new report by Pyramid Research. According to the report, “Saudi Arabia: Rising Data Traffic and Strong Demand for Enterprise IT Services Will Underpin Growth Through 2019,” total mobile and fixed services revenues in the consumer and enterprise segment in Saudi Arabia declined by one percent to $16.2 billion in 2014. This is the first decline in overall service revenue in the last decade. The drop is a result of aggressive promotional activity and Mobily's restatement of financial results. Mobily - the second largest operator in the country - saw revenue decline by 20 percent in 2014. Nonetheless, the Saudi Arabian telecoms market remained the largest in terms of total service revenue ($16.2 billion) in the MEA region in 2014, followed by South Africa ($13.4 billion) and Turkey ($13.0 billion). Fiber connectivity for high demand areas is key Over the next five years, annual growth of the Saudi telecoms market will average three percent per year, reaching $18.7 billion by 2019. Hussein Ahmed, analyst at Pyramid Research noted, “Operators have invested in upgrading network infrastructure and systems to handle growing data traffic volumes. The need in the short-term is for swift deployment of fiber connectivity in high demand areas. This will improve the competitive landscape in the fixed broadband services segment, where historically the incumbent operator, STC, has led.” Meanwhile, enterprise adoption of new services is increasing, with STC reporting revenue from its enterprise business unit growing by 12 percent in 2014. Uptake in private connectivity, VoIP, M2M and fiber is supported by operators' diverse IT service portfolios which include cloud computing and managed services. Further growth in B2B services will be achieved through tailoring IT services to specific industry sectors. Investment in tech start-ups, and entrance of new MVNOs The developed telecommunications network infrastructure in Saudi Arabia will support the entrance of new innovative technology start-ups, which not only target the Saudi market, but the wider region. A number of venture capital funds have already launched in the country, including Alkhabeer Capital, Mobily Ventures, STC Ventures and the government's own tech start-up fund. Meanwhile, the market entries of Virgin Mobile and Lebara will add a fresh impetus to the mobile market with new promotions for data and voice services. Ahmed adds, “Towards 2019 we will see the potential for improvements in the competitive landscape, while operators remain persistent in identifying new revenue streams. Saudi Arabia continues to evolve towards a truly digital economy, demonstrating to the entire Middle Eastern region the realizable benefits of investing in the telecoms sector.”
