Economic recovery boosts growth in Bahrain despite saturation

With Bahrain’s mobile market approaching saturation, the growth in the second quarter of 2011 was unexpected but is unlikely to stop, according to BMI.

Based on market data published by Batelco and Zain, there were an estimated 1.533mn mobile subscribers in Bahrain at the end of June 2011. This represented a 0.1% growth over the previous quarter but still below the 1.567mn mobile subscribers recorded at the end of 2010. The mobile penetration rate has been calculated at 115.8%, slightly up from 115.7% at the end of Q110, but down from 124.2% at the end of 2010. The positive growth in Q211, albeit marginal, reversed a trend of net losses recorded for three consecutive quarters starting from Q310.

Growth in Q211 was driven by market leader Batelco and third-ranked VIVA Bahrain, while Zain continued to record subscriber net losses. Subscriber losses in H210 and Q111 can be attributed to a combination of disconnection of unregistered lines, fewer growth opportunities brought on by market saturation and displacement of residents and foreign workers at the peak of the country’s political crisis in the first few months of 2011. However, positive growth will likely return during H211, mainly due to increased public spending and the gradual uptick in economic activities. Extended forecasts show an average growth rate of 1.2% over the next five years, bringing mobile penetration to about 118.8% by 2016.

Bahrain's mobile market remains predominantly prepaid. However, the disconnection of unregistered prepaid lines at the end of 2010 has improved the subscriber mix of mobile operators in the countries. Although new prepaid offers and promotions introduced by some operators are expected to boost prepaid subscriptions again, there will likely be greater emphasis on attracting postpaid subscribers by operators for long-term revenue growth. The growing demand for high-end smartphones provides an opportunity for operators to attract customers onto postpaid deals with voice and data allowances.

According to the Telecommunications Regulatory Authority (TRA) of Bahrain, the number of active fixed-line subscribers decreased by 4% y-o-y during 2010 to 228,000, representing an estimated market penetration of 18.1%. Fixed-line incumbent Batelco reported a subscriber base of 185,000, giving it a market share of 81.1%. The decline in fixed-line subscriptions during 2010 indicates acceleration in fixed-to-mobile substitution, especially as wireless broadband networks become the dominant form of internet access. The downtrend in fixed-line subscriptions will likely continue during its forecast period, bringing fixed-line penetration rate to 14% by 2016. By contrast, the broadband sector is set to grow at an average annual growth rate of 12% during the next five years, bringing broadband penetration across Bahrain to around 25.4% by 2016.

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