MVNO (mobile virtual network operator) subscription rates are expected to grow rapidly over the next five years in the Middle East region despite the existence of high entry barriers. Firms that can establish themselves as leading market players early on are therefore most likely to reap the rewards of market expansion. Differences in customer preferences and market structure in the Middle East as compared to already established MVNO markets such as Western Europe and North America mean that companies will have to think strategically about business models and market entry tactics.
The MVNO market in the Middle East in terms of competing players is currently characterized by a limited presence. Those that have entered the market have used a range of different business and marketing models with brands aimed at particular expatriate communities being particularly prevalent.
The Middle East is far behind developed regions such as Western Europe and North America in terms of MVNO subscriptions and penetration. Where MVNOs do have a presence in the region, they have made a significant market impact despite barriers such as tariff regulations and minimum price floors.
In Oman, MVNO subscriptions are estimated to account for 14.9% of total mobile subscriptions in 2015, while recently launched MVNOs in Saudi Arabia have acquired a significant number of subscribers, making the Saudi MVNO market the largest in the region in 2015.
Over the next five years, total MVNO subscriptions in the Middle East (including Oman, Jordan, Saudi Arabia and Israel) are expected to grow at a CAGR (compound annual growth rate) of 19.5% over the 2015 to 2020 period, with Saudi Arabia being the fastest growing market in terms of subscriptions.
Market expansion in the region will largely be supported by continued subscriber acquisition by MVNOs in Saudi Arabia. Further developments in the Middle Eastern MVNO market will be supported by the entrance of MVNOs in Iran. Business models targeting expatriate communities are likely to remain strong as well as the use of MNO sub-brands targeting other niche segments.