Monday, December 5, 2022
Published 7 Months Ago on Monday, Apr 25 2022 By Ahmad El Hajj
The Saudi telecom market is highly competitive with the existence of three major mobile network operators, STC, Mobily, and Zain KSA and several mobile virtual network operators (MVNO) licensed by the Communications and Information Technology Commission (CITC), the main communications regulatory authority in the KSA. Although each with a different strategy, they have been all working to meet the kingdom’s Vision 2030 which highlights the importance of the telecom infrastructure as a key component in the digital transformation process.
The Etihad Etisalat or Mobily was established in 2004. The Company’s major shareholders are Etisalat Emirates Group (27.99 percent) and the General Organization for Social Insurance (6.90 percent). The remaining shares are owned by institutional and retail investors. Recently, E& the brand for Etisalat Group has proposed to increase its share in the company to 50 percent plus one share in a multi-billion-dollar deal. This move acknowledges the big potential in the Saudi telco landscape, and the role played by Mobily in disturbing STC’s long stronghold on the market.
In a fierce competition in the MENA region between the four main operators, namely E&, STC , Ooredoo, and Zain, every opportunity could land a big advantage. Mobily is in fact one of the rising stars, ranking 6th according to the 2022 report by Brand Finance with a brand value growth of 18 percent, exceeding STC’s 16 percent.
The brand value is the result of notable efforts in improving the customer experience. In the latest OpenSignal Saudi Arabia Mobile Network Experience report released this month, the year-over-year (YoY) trends shows a clear rise in the performance of Mobily. Notably, the company wins the “Excellent consistent quality” and the “Core consistent quality” categories which directly relate to the user experience. It has also won the voice app experience. In comparison, STC was the winner in all categories in April 2021. OpenSignal also classified Mobily among the world’s rising stars in game experience and voice app experience worldwide.
Mobily has been investing a lot in fixed access connectivity by expanding its Fiber to The Home (FTTH) base and more recently delivering 5G Fixed Wireless Access (FWA). The model followed by Mobily is unique in the kingdom as 5G has not constituted the central focus of the company’s strategy. The 5.6 percent YoY revenue increase, highlighted in E&’s latest Group capital’s market day, is mainly attributed to solid growth in the FTTH consumer sector. The maturity in the services in that area has also lead to some significant capital expenditures reduction (CAPEX) of 25.1 percent as the strategic objectives were achieved and the expenditures are mostly related now to bridging the 5G gap to STC through an improved 5G roll-out across the territory.
Mobily has also been a key investor in the Saudi National Fiber Network (SNFN). Lately, it has partnered with Huawei to further upgrade the network into an ultra-broadband optical backbone network that will enable improved business-to-business (B2B) offerings and work accordingly towards achieving the Kingdom’s 2030 vision in terms of the national transformation plan.
Another avenue fully exploited by the operator relates to Internet of Things (IoT). Mobily has been working on strengthening its IoT related offerings as it is among the niche business services that expected to grow in the forthcoming years notably with advances in connectivity. Mobily Business has been offering several services including fleet management services, machine to machine (M2M) services, and mobile surveillance services, among others.
The services are not unique to the company as other operators are offering IoT and M2M services as well. However, Mobily has made IoT among its top priorities. Its Narrowband-IoT (NB-IoT) deployed in collaboration with Nokia on the 800 MHz band cover most of the territory, making it among the largest as per E&’s latest report.
Finally, Mobily has joined a consortium of telecom operators including Etisalat, Du, STC, Zain, Batelco and Omantel to push forward the implementation of Open Radio Access Network (RAN) solutions.
In the race to deliver the best 5G experience, Mobily still lacks behind its main competitors, notably STC. The latest OpenSignal mobile network experience report illustrates the gap in terms of 5G availability in the Kingdom as well as download and upload speeds. While 5G has not been the main focus area in its strategy, it has certainly become an avenue where expenditures are channeled. In the last couple of years, Mobily has had tight collaboration with Nokia and Ericsson. Its collaboration with Nokia involved trialing 4G and 5G fixed wireless access network slicing on its live network. The latest memorandum of understanding (MoU) with Ericsson explores 5G industry use cases through the use of Ericsson private 5G solutions.
The 5G race is key to achieving the digital transformation objectives underlined in the Saudi Vision 2030. 5G has indeed become a priority for Mobily and the gap with other operators is dwindling. STC is so far leading the arms race, but many opportunities will certainly emerge in the new future. Non-terrestrial networks (NTNs) could probably constitute the arena where operators will compete. The CITC has effectively announced a spectrum auction in August 2022 on the 2100 MHz band for 5G NTNs. Mobily’s drive for IoT solutions, backed by its major shareholder E&, could be key in determining the auction’s outcome. Using high altitude platforms (HAPs), Low altitude platforms (LAPs) and other satellite solutions are essential to unlock large-scale IoT solutions that are not possible with terrestrial 5G networks.
The Saudi operator is following a rather unique path that would seem sometimes weird. In a what seemed to be an excellent step, the CITC approved the merger of the tower businesses of Mobily and Zain into a new commercial entity in 2021. Mobily later on rejected the deal stating that “it does not align with Mobily’s strategy and objectives of achieving financial and operational efficiency”. Zain however persevered with this approach, completing a series of sell and leaseback operations in Kuwait, KSA, and Jordan.
Mobily however has continued with its own GAIN strategy which consists of growing core revenues, accelerating digital revenue streams, implementing and optimizing efficient delivery, and nurturing a positive experience for all. This strategy follows the RISE strategy which basically was a healing process for the company after a period marked with negative revenue numbers, and most importantly, an accounting scandal in 2014 when the company reversed a USD 58.6 million to a USD 243 million loss in profits, leading to several lawsuits and a slump in shares.
The recovery process in the last five years has been going very well with the company regaining the trust of its customers, turning its losses to gains. The company has even committed to sustainability objectives, aligning its targets with the United Nations Sustainable Development Goals (SDG), working on reducing energy consumption, providing free Wi-Fi access in public places, and promoting gender equality.
As with the other operators in the Kingdom, most of the decisions taken align the country’s 2030 vision, notably in terms of strengthening the digital infrastructure (telecom, data centers, etc.) and embracing digital transformation.
Mobily has had a tumultuous journey since its inception in 2004. The main target for the company has been the long time operator monopolizing the market, namely STC. The rise of the new provider has been taunted by financial issues. However, during the last few years, it has been thriving, regaining the trust of its customers, and rivalizing with its main competitors.
The key to the recent success has been related to them following their own plan of action, rather than mimicking the strategy of others. Given the high competition in the Saudi market with the existence of many network and virtual network operators, the opportunity is there for Mobily to overhaul STC as the leader in the market, especially that it is backed by a giant global brand, E&.
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