• October 23, 2016
    Last updated 5 minutes ago


Mena mobile phone industry to contribute 4.2 per cent to GDP by 2020

Subscriber growth rates will slow further due to the more advanced markets approaching saturation, GSMA

15:39 October 17, 2016

Dubai: The mobile phone industry’s contribution to the Middle East and North Africa’s GDP will grow from 4 per cent in 2015 to 4.2 per cent by 2020 and contribute $194 billion by 2020 compared to $156 billion in 2015.

According to a new report by GSM Association (GSMA) titled “Mobile Economy MENA 2016”, which was released on the sidelines of the event, there were 339 million unique subscribers by mid-2016 in the region, accounting for 60 per cent of the population.

GSMA is an association of mobile operators and telecom companies devoted to supporting the standardising, deployment and promotion of the GSM mobile phone system.

Jawad Abbasi, head of the Middle East and North Africa in GSMA, speaking at the opening keynote of GSMA’s Mobile 360 event, said that global subscriber penetration overtook Mena during 2014, with the region now the second least penetrated region in the world. There is though huge variation between countries in the region, from the advanced Gulf Cooperation Council (GCC) states where 77 per cent of the population on average are mobile subscribers, to some of the African Arab states such as Comoros, Djibouti and Somalia where subscriber penetration is less than 30 per cent.

Bahrain, Kuwait and the UAE have a subscriber penetration rate of over 90 per cent, placing them among the most penetrated mobile countries in the world.

“Subscriber growth rates will slow further over the next few years due to the more advanced markets approaching saturation, the challenge of growing penetration in the less developed markets, and unstable political and economic conditions in several markets that are currently showing little sign of improvement,” he said.

This means the region will fall further behind in terms of subscriber penetration, reaching 63 per cent by the end of 2020 compared to a global average of 73 per cent.

The number of smartphone connections has more than doubled over the last three years to reach 263 million in the second quarter of this year, accounting for 42 per cent of total connections in the region.

The region is seeing continuing migration to mobile broadband services, helped by the expansion of 3G coverage. By mid-2016, mobile broadband (3G and above) accounted for more than 40 per cent of connections, up from just under 30 per cent in 2014.

He said 4G is starting to accelerate despite the comparatively late arrival of 4G networks in the region.

Since the first LTE networks were launched in late 2011, a total of 40 LTE networks have launched in 17 countries, and three more countries plan to launch LTE networks in the next few years.

“Mena has historically been one of the fastest growing regions in terms of recurring revenues. However, 2013 and 2014 saw a reversal of this growth, with recurring revenues declining by 1.9 per cent and 1.5 per cent annually in 2013 and 2014 respectively. Slowing subscriber growth and the socioeconomic conditions in the region are the major factors behind this decline,” he said.

However, looking forward, he said that revenues are likely to grow modestly as mobile operators continue to monetise the strong growth in data traffic and as mobile broadband uptake continues. “Growth will not return to the levels previously enjoyed in the region due to further slowing of subscriber growth, ongoing political and socioeconomic instability, increasing competition and the cannibalisation of traditional revenues by IP messaging platforms,” he said.

Thus, he said that mobile operators are under pressure to diversify their revenue streams, implement new services and find effective ways to monetise the growth in data traffic to counteract the revenue squeeze.