Africa will have more than 11 million LTE customers by 2015
Africa market share by spectrum and transmission type in 2015
The Middle East will have nearly 7.5 million LTE customers by 2015
Middle East market share by spectrum and transmission type in 2015
LTE is rapidly gaining momentum in the Middle Eastern region. LTE subscriptions will grow at an average annual growth rate of 197%, with subscriptions already expected to reach 110,000 by the fourth quarter of 2011, according to research by SNS Telecom.
Global LTE subscriptions are racing ahead of initial expectations. They have already passed 3.7 million in the third quarter of 2011, spanning over 36 worldwide networks.
There have been commercial network launches in Saudi Arabia — from Zain Saudi, STC, Mobily — and the UAE, from Etisalat, in September 2011, and over 26 LTE commitments. As a result the Middle East has initiated a major push towards commercial LTE adoption, besides pioneering in the commercial release of TD-LTE user devices.
Like many Middle Eastern markets, both Saudi Arabia and the UAE are sparsely populated outside of the major cities, and operators are unlikely to deploy fibre infrastructure from broadband beyond major urban and industrial areas as economic activity is typically highly concentrated in these areas.
Rural broadband services
Connecting remote areas using fixed broadband technologies such as DSL or fibre will be prohibitively expensive and will have a very low return on investment. However, technologies such as LTE could serve as a relatively cost-efficient option to deploy high-speed broadband services to smaller towns and villages across the country, which operators attribute as the major reason to early LTE adoption both the countries.
By the fourth quarter of 2011, it is expected that there will be over 6.6 million LTE subscriptions worldwide, with the Middle East region accounting for a 1.7 % market share with over 0.11 million.
With commercial LTE launches by all three major incumbents, Saudi Arabia is not only leading LTE adoption within the Middle East, but it is also pioneering TD-LTE adoption globally by becoming the first country to commercially offer TD-LTE user devices.
Driven by early deployments, attractive free trial packages such as those offered by Saudi Arabia’s STC, bundled 3G/LTE pricing models, and the increasing demand for high-speed mobile broadband access in rural locations, Saudi Arabia will lead LTE subscriptions throughout the region with over 70,000 subscriptions by the fourth quarter of 2011 and over 0.39 million by the fourth quarter of 2012, representing a year-on-year growth of 457%.
By 2015, Saudi Arabia is expected to account for over 5.44 million subscriptions representing a compound annual growth rate of 197%, a figure that is much higher that the worldwide CAGR of LTE adoption at 180%. Worldwide there will be 410 million LTE customers by 2015.
Etisalat commercial launch
The UAE is also likely to follow suit, with commercial LTE devices for Etisalat expected to be launched in December 2011, following a pre-commercial network release in September. Rival operator Du is also expected to commercial launch its LTE network in due course, leading UAE’s LTE subscriptions to hit 40,000 by the first quarter of 2012.
From a spectrum perspective — although the 2.3 gigahertz TDD spectrum is likely to retain the highest market share, driven by Saudi network deployments — re-farming is also expected by 2013, which will make 1800 megahertz the most sought after band.
Meanwhile LTE deployments in Africa are also gaining momentum. While no commercial network deployments are presently in place, a number of prominent operators have begun trialling LTE technology. Among these are three operators in Egypt — Vodafone, Etisalat Misr and ECMS — plus three in South Africa — MTN, Cell C and Vodacom — as well as Globacom in Nigeria.
As the operator-preferred 2.6 gigahertz band has not yet been auctioned in most countries, a number of operators have deployed their initial trial networks at 1800 megahertz, such as the MTN South Africa trial network.
Vodacom and MTN are expected to carry out early commercial launches before the second quarter of 2012, taking African LTE subscriptions to 0.35 million by the end of 2012.
By 2015, it is estimated that the Middle East will account for 7.49 million LTE subscriptions, while Africa will account for 11.15 million subscriptions, representing global market shares of 1.8% and 2.7% respectively.
While LTE is gaining a much quicker uptake than initial analyst predictions, there still exist a number of unanswered questions to the commercial success of LTE deployments in the Middle East and Africa — such as the complexities in pricing plans, the lack of the sub-spectrum below one gigahertz in the Middle East, plus regulatory issues, as well as interoperability between devices operating in different frequency bands.
The lack of spectrum below one gigahertz in particular is likely to remain a major hurdle along the way to LTE rollouts. Although the 2.3/2.6 gigahertz bands presently used in the Middle East are widely backed by device manufacturers and equipment suppliers, this band does not penetrate buildings as effectively as spectrum in the lower frequency bands, which is a considerable disadvantage.
Without sub-gigahertz spectrum, Middle Eastern operators will struggle to offer true high-speed services in the areas of greatest demand. In the UAE nearly three quarters of its mobile traffic originates inside buildings. GTB
James Bennett is an analyst at Signals and Systems Telecom, a market intelligence and consultancy firm. The results were published as part of SNS Telecom’s study: LTE in the Middle East & Africa: Contracts, Operator Reviews, Spectrum Strategies, Subscriptions, Pricing and Forecasts 2011-2015.
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