BPN 1098 Middle East telecom competition

While I am in Bahrain there is great excitement. Batelco, the incumbent telecom company, eyes a 4 billion US dollar acquisition, while the Bahrain government will assign the third mobile license by the end of the year. Telecom competition is heating up outside and in the Middle East.

Batelco is a Bahrain state-owned company by origin. It has expanded to Jordan, Yemen, Kuwait and Egypt, while it ha a bid for a license in Quatar. Batelco has been an incumbent company, but it has gotten competition in the past years, as also the Gulf States are opening up competition. Especially the fixed line business is under fire with the incumbent companies. With opening up competition, the states are setting up authoritative regulatory bodies, like the OFCOM in the UK and OPTA in The Netherlands. In Bahrain this body is called the Telecommunication Regulatory Authority (TRA). Batelco has quite some fights with this body and has commenced legal and arbitration proceedings. On the other hand the company has recently invested in the migration of a new generation network. The migration will start later this year.

Looking for expansion Batelco is looking outside the Gulf area and in fact outside the Middle East. It considers the Middle East no longer as hunting ground, as the companies have grown too expensive. The only areas left In the Middle East are Lebanon and Syria. Now Batelco looks to Asia and the Asia Pacific into countries Malaysia and Indonesia. It looks like Batelco is picking up a big company, as it has reserved 4 billion US dollar in its coffers.

Batelco will also have to seek revenues outside Bahrain, as in the field of mobile telephony there is more competition coming up. Batelco has 3,3 million subscribers in its present international footprint; it has 704.000 subscription in Bahrain, which has 1,05 million inhabitants. In the mobile field there is competition as Zain has a second license. Zain bought Netherlands-based Celtel for 3.4 billion US dollar in 2005 to expand in sub-Sahara Africa and operates now in 20 countries in the Middle East and Africa. Presently the penetration rate for mobile services in Bahrain is 110 per cent and the overall growth in 2007 was 13 per cent.

Now no less than seven local and global companies are eyeing the third mobile license. This is the result of an action by the TRA seeking expressions of interest. The third operator will be selected through bidding by the end of the year. The selection of a third operator will mean that lower prices will start to reach consumers.

Blog Posting Number: 1098

Tags: telephony, mobile