Boston, MA -- (SBWIRE) -- 01/24/2014 -- BMI View: We now expect a more tempered subscriptions growth during our forecast period ending in 2017. This is partly because of slower than expected growth during the first nine months of the year, and partly because of recent Saudi government policy to reduce the country's reliance on foreign workers. According to local retailers of mobile handsets, their sales have nearly halved as a result of the policy. BMI believes that it will also have a negative impact on total mobile subscriptions. However, we expect average prices to rise as a result.

Key Data

- The mobile market grew by 0.3% quarter-on-quarter (q-o-q) in Q213 after three consecutive quarters of subscriber decline.
- Mobile ARPU was flat in Q213.
- The fixed-line market grew by 4.3% in 2012, driven by the residential segment.
- Total broadband subscriptions grew by 16.5% in 2012.

Risk/Reward Ratings

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Saudi Arabia is ranked second on BMI's Risk/Reward Ratings (RRR) table for Middle East and North Africa (MENA) in our Q313 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

In November 2013 the Madinah Development Authority signed an agreement with Etihad Etisalat (Mobily) to provide the Central Zone of the Emirate of Madinah with the latest telecoms and IT infrastructure for a period of ten years. The contract - which follows on from its July 2013 contract for the King Abdullah Economic City (KAEC) - shows the government's continued emphasis on modernisation through the use of ICT, and confirms BMI's long held view that Mobily's ever increasing range of services and capabilities will ensure its outperformance over the long term.

In November 2013 STC signed a four-year managed services contract with Chinese vendor Huawei Technologies. The deal extends the existing partnership between the two companies. As BMI has noted on several occasions, slowing subscriber growth and changing subscriber usage is putting pressure on operators' bottom lines, leading them to seek ways to keep costs down.

In October 2013 STC entered into a strategic partnership agreement with Saudi Aramco to facilitate the works of King Abdullah Petroleum Studies and Research Center. Under the agreement, the operators will execute a wide range of the project interconnect services and circuits, along with mobile and telephone services for the research institute.

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