MyAdhan Blog

Link: Bahrain may struggle on bids for 3rd mobile licence

Bahrain may struggle to attract bidders for its third mobile licence due for auction this year, according to analysts. “The population of Bahrain is small at close to 1mn and penetration is already more than 110% so as a market it’s not very attractive,” Arab Advisors Group analyst Andrawes Snobar told Zawya Dow Jones. Snobar said that Bahrain’s telecoms regulator will have to offer incentives for the new operator to gain a foothold in the market. Bahrain, which produces little oil, needs to raise cash by selling state assets and attracting foreign investment to help fund development as it competes with Dubai. Marise Ananian, a telco analyst at EFG-Hermes said the auction that is expected in August may yield a lower price than the recent bids for mobile licenses in the Middle East. That could make it cheaper than Egypt’s $2.9bn for a third mobile licence in 2006 when mobile penetration was just 20%, a far cry from Saudi Arabia’s third licence, which was awarded to Zain in 2007 for $6.1bn. “The auction is unlikely to raise as much as previous licences in the region,” Ananian said. Countries like Egypt, with a population of 72mn presented a more attractive commercial option for telcos, according to Ananian. Bahrain’s Telecommunications Regulatory Authority has said that although seven companies had expressed interest in the auction process initially only six said they may bid for licence. “The companies that applied are both national and international, some are from Europe and Asia,” TRA spokesman Abdulelah Abdulla told Zawya Dow Jones in a phone interview. Abdulla declined to give further details on the companies but said he expected the number to rise closer to the time bidding starts in the third quarter. “The number of responses received does not necessarily reflect the full amount of interest in the third mobile license in Bahrain, as some companies may prefer to submit their bids without expressing any interest at this time,” TRA general director Alan Horne said in a statement. The TRA added that its primary concern is to increase competition in the market and break the current duopoly of Bahrain Telecommunications Company, or Batelco, and MTC Vodafone Bahrain. “The TRA will be putting more emphasis on the quality of services and products the companies can provide to bring down prices and give better value for money,” Abdulla said. Since MTC Vodafone entered the market in 2003, it’s won a significant share of new mobile connections aided by the overall rapid growth in the market. By February 2007, it had approximately one-third of all mobile subscribers in Bahrain, though Batelco still enjoyed a market share of approximately 70%, both in terms of connections and traffic. “Bahrain may be saturated in the number of handsets but in terms of usage there’s a long way to go, the usage of video calls and mobile broadband and multimedia video streaming are still in the early stages of competition,” said Abdulla. A winner for the third mobile license will be announced on December 4.