STC and mobile rivals pressed by demand

What's Up: Saudi Telecom is well positioned to capitalise on growth thanks to booming demand for data services.

Booming demand for data services means Saudi Telecom (STC) is well positioned to capitalise on growth.

An increase in sales of smartphones has led to more users in Saudi Arabia accessing video, social networks and games via mobile networks.

The kingdom's current third-generation (3G) infrastructure has proved incapable of handling the rising demand, and STC said this week it had launched faster mobile services.

The company's long-term evolution network was built by Nokia Siemens Networks for the country's western region.

The operator's domestic rivals Mobily, which is owned by Etisalat, and Zain Saudi Arabia also said this week that they had launched high-speed mobile broadband services.

TAIB Research's GCC Equity Report said revenue from domestic operations for STC grew during the first half of this year as an outcome of broadband, data and content services.

"Currently, the company has more than 11 million internet users, and STC's internet traffic saw exponential growth of 1,600 terabytes carrying 90 per cent of Saudi Arabia's total internet traffic," the report said.

It added that STC's net profit narrowed 0.1 per cent to 3.82 billion riyals in the first half of this year from a year earlier.

Saudi Arabia has mobile penetration of 186 per cent, while the UAE also has a highly saturated mobile market, with mobile penetration of 197.2 per cent, said a Frost & Sullivan report published this week.

"As we have seen, there's been only two operators in Saudi Arabia that have launched 4G … and I think the next country that will be launching that will be the UAE. Let's don't forget that Etisalat owns Mobily," said Jonas Zelba, a research analyst at Frost & Sullivan.

"They all testing it; it's just a matter of time and I expect the UAE to be 2012 and the rest [of the GCC in] 2013," Mr Zelba said.