Boston, MA -- (SBWIRE) -- 06/12/2013 -- We have reined in our growth expectations for Saudi Arabia's mobile sector owing to market saturation and the implementation of new SIM identification and ownership laws, which is set to spur regular discounting of inactive SIMs as well as reduce the uptake of mobile lines by temporary visitors. This will be a further incentive to network operators migrate their existing subscribers to higher value packages to sustain revenue growth. A similar strategy will play out in the fixed network segment as operators seek ways to boost returns from their investment in next generation network infrastructure.

Key Data

- The mobile market contracted by 1.3% y-o-y in 2012 after a second consecutive subscriber decline in Q412.
- Mobile ARPU was flat in 2012.
- The fixed-line market grew by 2.4% in 9M12, driven by the residential segment.
- Fixed and mobile broadband subscriptions grew by 15.4% and 9.8% respectively in 9M12.

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Risk/Reward Ratings

Saudi Arabia is ranked second on BMI's Risk/Reward Ratings (RRR) table for Middle East and North Africa (MENA) in our Q213 update. The country's score benefits from strong voice and data subscriptions growth, partly fuelled by seasonal demand during religious festivals. The country's lowest score, albeit higher than the regional average, is in the industry risks category and reflects the government's significant interest in the telecoms sector through its majority stake in the incumbent operator.

Key Trends And Developments

Saudi Arabia's mobile network operators are ramping up new network development contracts and service partnerships with global vendors to take advantage of the growing demand for high-value personal and corporate data-centric services. Mobily awarded two contracts totalling US$256mn in January 2013 to equipment vendors Ericsson and Huawei Technologies to expand and upgrade its high-speed data networks. The operator also announced the addition of 2,000 new sites to its 4G network as well as 1,300 new 3G sites to offer coverage to more than 660 locations.

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