The Middle East region—and particularly the GCC—has been amongst the global forerunners in 5G experimentation and deployment. Over recent years, many of these networks have scaled tremendously as operators start to monetize these investments. New 5G ecosystems have been built. Original 5G-powered applications have been introduced to local industries. Many organizations also had the foresight to invest in 5G digital infrastructure long before the current pandemic, and that investment has paid off significantly as network traffic has increased, and more businesses have gone digital.
Gulf States such as Kuwait, the UAE, and Saudi Arabia have become 5G leaders, and are all in the top 10 in terms of 5G coverage and speed. Among these countries, Kuwait was one of the first countries to deploy 5G on a large scale. Since June 2019, three leading operators in Kuwait have started to deploy 5G on a nationwide scale. Recent reports in H1 2021 show that 5G development of these operators has entered a new growth track.
Continued investment in 5G achieved resilient financial performance
In Q1 2021, Kuwait demonstrated the highest year-on-year improvement of 84% 5G download speed, this is attributed to Kuwait's visionary 5G investment. Most recently, telecom services providers in Kuwait have announced strong business results that have been bolstered by their 5G user growth as well as 5G technology efficiency and competencies:
- Zain Kuwait has been profitable with recorded 4% revenue growth in H1 2021. Data revenue grew by 5% Y-o-Y and represented 40% of total revenue. Bader Nasser Al-Kharafi, Vice-Chairman and Group CEO of Zain Group commented: “The healthy growth in Kuwait was powered by its incomparable 5G network that sees the operator capturing the largest market share in the country.”
- Looking to stc, Kuwait, as another example, its first-half revenues increased by 2.2% compared to the same period a year ago. Engineer Maziad Alharbi, stc’s Chief Executive Officer, pointed: “Due to the world-wide fundamental changes imposed by the COVID-19 pandemic, represented in the increasing demand for the traditional communication and digital services, stc has been able to achieve these results by leveraging on the 5G network’s capabilities and efficiency.”
- Ooredoo is another operator which has benefitted greatly from its 5G investments. In Kuwait, for instance, Ooredoo recently witnessed the highest quarter-on-quarter 5G customer base growth ever reported.
What these and other examples reinforce is that 5G is indeed an accelerator for operators’ businesses. Through insights into the development experience of the first-wave 5G markets—such as the GCC countries, China, and South Korea—it is evident that 5G business growth needs strategic patience, and after an 18 to 24 months climbing period, operators have achieved strong revenue growth as well as profit growth due to the rapid increase of 5G subscribers and business services.
5G user growth enables a positive business cycle
Through strong 5G investments in GCC countries, including Kuwait, a positive business cycle is beginning to emerge. This can be seen in three key domains:
- Consumer market: In just 19 months after 5G launching in the GCC, the number of 5G mobile phone users exceeded 2 million; twice as fast as the adoption in the 4G era. Especially in the second half of 2020, the number of 5G mobile phone users in the Middle East increased by more than 350% after iPhone 12 5G launched. In Kuwait, for instance, the 5G user penetration rate has almost reached 17%, which is the highest among the GCC countries. This is going to reach the threshold of popularity of new things based on Rogers's Diffusion of Innovation Theory, in which the popularity of new things is led by a small number of people, and once the 20 percent threshold is reached, it will enter a phase of rapid growth. It is predicted that as more brands of high-, middle- and low-end 5G mobile phones are released, the number of 5G users in the Middle East could reach 8 million by the end of this year.
- Home market: Since the pandemic, gaming, HD video, remote working, and remote education have become top home applications. When fiber is unavailable in many areas, 5G has provided remote working and education for more than 380,000 families, ensuring the availability of networks and services. Kuwait alone accounts for more than 45% of 5G FWA (Fixed Wireless Access) subscribers in the Middle East.
- Industry market: 5G business leased lines have grown rapidly since the second half of last year. Over the past year, the number of 5G 2B leased lines has grown from 230 to 12,000 in the Middle East, with about 40% of demand coming from Kuwait. During the curfew period in Kuwait, carriers and banks leveraged the unique value of 5G mobile connectivity to implement mobile banking, ensuring that important real-time and contactless services can be accessed anywhere. Meanwhile, the Kuwait Ministry of Education is planning to connect hundreds of schools through 5G to enables better connections, as well as more and more intelligent application scenarios which are significant to peoples’ livelihoods, and which enhance national strength. 5G leased lines provide the fastest time to market, and high QoS guaranteed wireless connections, especially in areas with less fiber deployment. These 5G features demonstrate irreplaceable value for a number of SMEs, as well as campuses such as schools, hospitals, factories.
The 5G development journey is far from over. While rapid progress has been made, most agree that 5G’s potential is still in its infancy in Kuwait. Global case studies allude to this future potential.
For example, based on its Q2 2021 financial report, South Korea’s LG U+ achieved sustained growth with a 39.8% increase in net income. As of the end of June, the LG U+’s 5G user base has more than doubled year-on-year to 3.73 million, accounting for 21.7% of the total users. 5G demand has been spurred by LG U+'s continuous development of value-added services and wide-range of 5G use cases for both consumer and enterprise segments. AR shopping, remote learning applications, VR content libraries, and telehealth applications are just some of the new services accelerating 5G user migration. These in turn enable service providers to offer package upgrades and increase ARPU. More importantly, this service diversity and innovation brings wholly new experiences to 5G end users.
The performance of Kuwait’s 5G market in H1 2021 provides confidence that the achievements of South Korea will continue to occur in the GCC countries.
Continuously innovate 5G services to achieve new business success
It’s clear that 5G is becoming an accelerator for operators’ businesses in the GCC. 5G is also an infrastructure that underpins other segments of the digital economy. This value is echoed in governments’ national development strategies, which are taking the opportunity to transition from oil-dependency, and which spotlight digital transformation, connected cities, and inclusive digital access as instrumental to reaching long-term socioeconomic goals.
This will undoubtedly bring many new and exciting 5G-powered applications to the GCC. These will not just benefit telecom operators, but businesses and countries overall. Analysys Mason has projected that 5G will support economic benefits in Kuwait by generating a cumulative increase of more than USD1 billion in GDP until 2025. The spread of digitalization in Kuwait has a potential translation to 25,000 added jobs. For the government, with greater 5G, cloud, and AI innovation, it will deliver wide-ranging benefits through improving access to healthcare and education, reducing road congestion, increasing the attractiveness and likeability of cities, and inventing new ways of communication.
For pillar industries such as oil & gas, digital transformation is becoming the industry’s strategic vision. The large scale use of cutting-edge applications such as HD CCTV cameras, mobile surveillance, remote collaboration, remote control of robots, AGV, and so on will all greatly improve productivity. All of these use cases need ubiquitous and reliable mobile connectivity with wide area coverage. 5G's air interface capabilities, coverage, latency, mobility, E2E security, and SLA guarantee can perfectly meet the requirements of such campus applications. Indeed, 5G is actively accelerating digital applications in this industry. Some leading oil companies in Kuwait are already conducting 5G beta tests with operators to validate the productivity gain of innovative use cases.
The path forward
In summary, the strong growth in Kuwait’s 5G market in H1 2021 has proven that the country’s visionary 5G investments have been worth it. These not only bring business success to operators, but better connections and superior experiences to individuals, families, and enterprises. The continuous innovation in 5G technologies will further enhance these networks, promote more innovative applications, and bring more business value to operators, as well as more value to society.
