Expatriate communities offer the best target for MVNOs in the Middle East

New entrants such as retailers could seize theopportunity to move into the provision of telecomsservices as MVNOs

27 April, 2009
Oman today saw the launch of Friendi Mobile, thefirst mobile virtual network operator (MVNO) in theMiddle East, with a second MVNO, Renna, expected tolaunch shortly.

Both Friendi and Renna operate through agreementswith fixed and mobile incumbent operator Omantel,which has suffered a significant loss in mobile-marketshare as a result of the rise of No. 2 operatorNawras.

Informa Telecoms & Media believes that bestprospects for the first MVNOs in the Middle East,particularly in the GCC*, is to focus on the largeexpatriate communities.

There were 12.8 million non-nationals in the GCCstates in 2005, accounting for 36% of the total 36million inhabitants of the GCC, according to theUnited Nations.

South Asian countries account for the largestnumbers of expatriates in the GCC. India is thesingle largest contributor of expatriates in theGCC, and there are also sizeable expatriatecommunities from Bangladesh, Pakistan, thePhilippines and Sri Lanka.

“There is a clear opportunity for MVNOs in theMiddle East to offer the sizeable expatriatecommunities here customised services with featuressuch as call-centres that are available in theirown language, and value-added services includingcontent offerings that cater for their interestsand backgrounds,” said Matthew Reed, Senior AnalystMiddle East and Africa, at Informa Telecoms & Media.

“Significant numbers of people within these groupsare also likely to find the offer of discountedcalls – both local calls and international calls– attractive so that is another area that MVNOsshould look at.”

The progress of MVNOs in Oman will be closelywatched across the region, by operators, regulatorsand potential MVNOs. Jordan also has advancedlegislation for allowing MVNOs, although none ofJordan’s three GSM operators have so far beenunwilling to host MVNOs. Bahrain, Israel and Turkeyare also discussing legislation to allow MVNOs toenter their markets.

Nevertheless, the MVNO market in the Middle Eastand Africa region is likely to remain modest insize for some time. According to research by InformaTelecoms & Media, there will be 2.65 million MVNOand reseller** subscriptions in the Middle East andAfrica at end-2009, rising to 3.77 million atend-2013, with South Africa likely to remain thelargest single MVNO and reseller market in theregion.

The main service approaches taken by MVNOs worldwidefall into the following categories, according toresearch by Informa Telecoms & Media:
‧ Discount‧ Community/segment-targeted
‧ Full service, emulating a mobile network operator(MNO) or host network
‧ Premium service provider (of data and/orentertainment services)
‧ Converged bundled services or fixed-mobileconvergence
‧ Location-based services
‧ Enterprise/business-focused
‧ Advertising

Often the community-targeted services focus onethnic or national groups, such as expatriates ornationals with a particular immigrant background,for example those of a Turkish background inGermany, or North African in France and Belgium.

Community-focused services are the second-largestcategory of MVNOs worldwide, accounting for 20.2%of MVNOs globally in 2007, according to InformaTelecoms & Media.

MVNOs also offer an opportunity for companies fromother sectors – such as retail – to move into thetelecoms services market. In the Middle East,mobile handset and devices are usually sold byindependent retailers rather than by the operators.By becoming MVNOs these handset retailers coulddramatically extend the range of their offeringsto include telecoms services, taking advantage oftheir existing relationship with consumers.

Other retailers, such as supermarkets, have beenamong the most successful MVNO operators in Europeand that experience could be transferred to theMiddle East. The Carrefour and Ikea chains, whichboth have a presence in the GCC, operate MVNOs inEurope.

* The Gulf Cooperation Council, which comprisesBahrain, Kuwait, Oman, Qatar, Saudi Arabia and theUAE.
** Including a range of MVNO types, with differentlevels of autonomy from the host network.