Local Business

UAE and Saudi Arabia lead MEA ICT

Muzaffar Rizvi (muzaffarrizvi@khaleejtimes.com)
Filed on June 22, 2014

Basic phones to be gradually replaced by entry-level smartphones

UAE and Saudi Arabia lead MEA ICT (/assets/oldimages/ict-1-22062014.jpg)Mobile penetration across the Middle East and Africa is gaining momentum as the development of networks, economic growth and opportunities create more connectivity potential and boost smart devices that will drive growth in data traffic and LTE networks, says a senior official of Ericsson.

The UAE and Saudi Arabia will lead the growth in Information and Communication Technology (ICT) because of their sheer size while Egypt, Nigeria and Kenya serve as key economic drivers in Africa.UAE and Saudi Arabia lead MEA ICT (/assets/oldimages/ict-2-22062014.jpg)

“The transformation towards the networked society is accelerating in the UAE driven by the high demand on connectivity. Our latest study shows that mobile phone is becoming the primary device for the consumers in the country where we identify the increased demand on smartphones and applications,” Teemu Salmi, vice-president and head of operations, Ericsson Middle East and North East Africa region, told Khaleej Times on the sidelines of an event in Dubai.

“We are working with our partners in the industry to keep UAE at the forefront of this technological evolution.”

Ericsson, which is considered the driving force behind the networked society, sees exorbitant growth in the MEA’s mobile subscriptions that is expected to grow from 1.2 billion to 1.9 billion by 2019. “In fact, in some key markets, mobile density is ranging between 140 per cent and 180 per cent. This can be largely attributed to globalisation and prevailing socioeconomic conditions that serve as powerful catalysts for growth. Other contributing factors also include the scale of this addressable market; MEA’s demographic profile; the region’s robust ICT infrastructure; and, steep competition glutting the market,” he said.

To a question about data traffic growth seen as a major source of revenue for telecom firms in years to come, he said globally data consumption is increasing at a rapid rate. Here in the Middle East, it is no different — superior delivery devices, the collaborative nature of social media platforms, the growing trend of on-demand services and faster networks all work together to boost data consumption.

“Voice services are seeing their revenues decline and so, operators are forced to look for alternative revenue streams; data and data-enabled services, in turn, provide avenues for new business models.

“While there has been a dip in voice services sales across evolved markets both globally and in the region, there are still ample opportunities for telecom markets in their telecom infancy. For markets such as Iraq and Sub-Saharan Africa, for example, voice revenues continue to represent the bulk of operator income,” he said.

The latest Ericsson Mobility Report forecasts that global mobile data consumption will continue to grow at a strong annual rate. The report reveals that video will account for more than 50 per cent of mobile traffic in 2019.

Other key findings include:

Mobile data traffic will grow tenfold between 2013 and 2019
Mobile video traffic will grow 13-fold between 2013 and 2019 and it will constitute more than 50 per cent of all mobile data traffic in 2019
A smartphone user is expected to almost quadruple (4X) his/her mobile monthly data consumption by 2019, compared to today.
Total mobile traffic generated by mobile phones has exceeded that of mobile PCs, tablets and mobile routers. Traffic in the mobile phone segment is primarily generated by smartphones.
Set to grow 11-fold by 2019, Central Europe, Middle East and Africa will witness the second largest explosion of mobile data traffic after Asia

Future lies in LTE

About the growth potential in different telecom networks across MEA, Salmi said Long Term Evolution (LTE), with 288 networks in 104 countries at present, is expected to expand its presence in the region during next five years.

“By 2019, across the MEA region, 65 per cent of the LTE network will be WCDMA/HSPA. By contrast, in 2013, LTE was at 10 per cent, compared to GSM/EDGE, which stood at 85 per cent. This is due to the growing number of connected enterprises and consumers in the region – and their strong need for superior performance-based networks,” he said.

Elaborating, he said Nigeria, South Africa and Angola will have the most LTE subscriptions in the region between 2013 and 2019.

“Nigeria, South Africa and Kenya will lead in terms of WCDMA/HSPA subscriptions over the same period. GSM will continue to be the main technology used in Sub-Saharan Africa over the coming years and will cover 80 per cent of the population by 2019.

“As for WCDMA/HSPA coverage, it will grow from 20 per cent in 2013 to 65 per cent by 2019. LTE coverage will also increase from just five per cent of the population in 2013 to 40 per cent of the population in 2019,” he said.

Salmi was upbeat about the Machine-to-Machine (M2M) market and said this segment is currently in full swing, driven by declining costs, improved coverage, more capable radio technologies, regulatory mandates and a growing range of successful applications and business models.

“With smart cities becoming a reality and business enterprises looking for new revenue streams, M2M systems will see vertical and horizontal integration in the region.

“There were 200 million active cellular M2M devices at the end of 2013, and we expect to see this increase threefold by 2019. Today, the majority of M2M devices operate in GSM mode only. However, by 2016, these are anticipated to shift to 3G/4G networks,” he said.

About the present status of mobile broadband in MEA and its growth potential in next five years, he said global mobile broadband subscriptions reached 2.3 billion in first quarter of 2014 and will stand at 7.6 billion by the end of 2019, representing more than 80 per cent of total mobile subscriptions.

During that same period, global mobile subscriptions will grow to 6.8 billion; in parallel, mobile subscriptions across the Middle East are set to reach 365 million.

In reply to a question about future of basic phones, he said smartphone subscriptions across the globe were at 1.9 billion by the end of 2013.

“This figure is expected to increase to 5.6 billion by 2019. As a result of the rapidly expanding smartphone market, basic phones will be gradually replaced by entry-level smartphones and phones at lower prices will gain traction (< $100). The reasons for this are lifestyle necessity and attractive prices,” Salmi concluded.

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