| Kippreport.com

Saudi starts the 4G race

September 15, 2011 4:24 by Reuters

Etihad Etisalat’s (Mobily) new long-term evolution network will spur exponential growth in data traffic, the Saudi Arabia telecoms operator’s chief executive told Reuters on Wednesday.

“What we did in 3G over the past three years, we will maybe have the same traffic (over LTE) in six months,” said Khaled al-Kaf, chief executive of Mobily, an affiliate of the UAE’s Etisalat .

“Mobile broadband penetration is increasing day by day. Exponential growth is happening. (LTE) is a major milestone in providing higher speeds that customers need for applications today or in the very near future.”

Mobily and former monopoly Saudi Telecom Co (STC) this week both launched LTE, or 4G, which offers download speeds more than twice that of 3G. Both claimed to be the first Middle East operator to do so.

The carriers’ push for LTE reflected stagnating mobile subscriber growth, with the kingdom claiming the third-highest mobile penetration globally. In response, they are no longer chasing more subscribers, seeking instead to move pay-as-you-go customers onto contracts.

Contract customers provide more predictable revenues, higher usage and are less likely to switch operators.

Contract mobile subscribers provide 30 percent of Mobily’s revenue, Kaf said, predicting further “huge growth coming”.

Analysts said LTE was a game changer for Mobily and STC, allowing high-definition video streaming on mobile devices and narrowing the gap in quality between fixed line and mobile broadband, with the latter’s actual download speeds at present often much lower than advertised, especially at peak times.

Data provides about 20 percent of Mobily’s revenue, Kaf said. “We see that moving faster and faster in the near future. With the deployment of LTE we have a stronger proposition. In 3-4 years, there will be a ubiquitous type of network and services — the content will move with you.”

To achieve this, fixed and mobile broadband networks will be integrated so a user can switch from watching the same content on a high definition television to a mobile handset and then another device — a laptop, tablet or in-car device — without interruption.

This would create “a seamless handover of your services and applications and huge bandwidth between multiple screens,” Kaf said.

LTE will not alter Mobily and STC’s impending tower-sharing agreement, he said, reiterating that he hoped this would be completed by year-end.

Mobily’s shares rose 0.9 percent, rising from Tuesday’s three-week low, while STC ended flat. (By Matt Smith)