The latest update on the telecoms market of Saudi Arabia contains new data on the size of the country’s mobile telephony market as of mid-2009. It also includes new data on the size of the country’s fixed-line, internet and broadband subscriber markets, as published by the Saudi telecoms regulator.

According to the Communications and Information Technology Commission (CITC), Saudi Arabia had around 9mn internet users at the end of 2008, up by 20% from 7.5mn at the end of 2007. The report previously estimated that the Saudi internet user base numbered around 8mn at the end of 2008. The regulator’s figures therefore show that internet user growth has been stronger than envisaged. Reasons for the strong growth in internet usage include an increased public awareness of the internet, the growth of broadband services, the decreasing cost of internet access and computers (both PCs and laptops) and a wider range of internet services.

The regulator has also published data on the number of Saudi broadband subscribers at the end of 2008 and at the end of March 2009. It appears that Saudi Arabia’s broadband subscriber base numbered 1.33mn at the end of 2008. This had grown to 1.525mn at the end of March. Accounting for a large share of overall broadband subscriber growth appears to be an increase in the number of subscribers connecting to the internet wirelessly. For example, it appears that both Saudi Telecom Company (STC), the country’s incumbent telecoms company, and mobile market rival Mobily have seen steady gains in the number of customers who use a USB device and a laptop to access the internet via the operator’s 3G network. Meanwhile, STC also offered WiMAX-based broadband services. The number of broadband customers using WiMAX services is expected to grow in H209, following the launch of WiMAX operations by Etihad Atheeb in June 2009.

Despite Mobily’s growing presence in the broadband internet market, both it and STC have seen their share of the country’s mobile market rapidly eroded by the rise of Saudi Zain. Zain launched services in September 2008 and, by the end of June 2009, had secured a 9.7% share of the mobile market. Much of Zain’s growth has occurred in the postpaid subscriber segment of the market. BMI estimates that, by the end of June, the Saudi mobile customer base had risen to 39.15mn; this gives the country a penetration rate of 156%.

This quarter sees no change to Saudi Arabia’s overall position in the latest Business Environment Rankings for the telecoms markets of the Middle East. This is in spite of receiving a slightly lower overall score. The slight drop in Saudi Arabia’s overall score reflects a weaker rating in the Telecoms Market category. The main reason for lower Telecoms Market score is the drop in ARPU, which has resulted from a slowdown in consumer spending.