At time of writing, the Kuwaiti mobile market is poised for the entrance of a third player. Viva, backed by the Saudi Telecom Company (STC) has launched its brand in the country, and is open for preregistration. The company is trying to generate excitement by offering customised numbers and expects to launch commercial services by the end of 2008. It is entering a market with diminishing growth potential and dominated by prepaid subscribers, but one that boasts some of the highest ARPUs in the region, and even the world. The entrance of the third operator is expected to noticeably increase competitive pressures on price, and we could soon see those enviable ARPUs dropping.

Zain, the leading mobile operator in Kuwait, is still planning to move its international headquarters out of the country and into the more ‘business friendly’ Bahrain by the end of 2008. Zain, like several other strong Middle Eastern telecoms companies, has recently announced an ambitious acquisitions plan that it hopes will see it become one of the top 10 telecoms companies in the world. Zain is able to take advantage of the financial turbulence that is lowering many companies’ stock prices, since it is cash rich and can buy while the prices are reduced. Qtel, the majority share holder in Zain’s Kuwaiti rival Wataniya, has some similar ambitions, although it has tended to concentrate in different geographical areas. The Middle East and Africa will be the focus of Zain’s expansion plans in 2009 and 2010.

While European operators are faced with issuing profit warnings and watch their share prices fall, Middle Eastern telcos are doing well. Wataniya has seen impressive growth, with profits for Q308 rising 64% year-on-year (y-o-y). As well as its Kuwaiti network, Wataniya is active in North Africa and some other Middle Eastern states. Zain also saw a 25% y-o-y rise in Q3 revenues, which reached US$1.9bn. The company’s consolidated EBITDA grew by 20% y-o-y to US$764mn.

Kuwait has seen its fortunes improve in our Business Environment Rankings, and climbs four places to sit fifth in the table this quarter. This recovery is in spite of a slight decline in its telecoms market score, and comes as result of a greatly improved score in the country risk category. BMI’s country risk analysts were worried about growing instability in the country, but now feel that the greatest risk is passed.