News Column

New generation industry

June 30, 2014

Saudi Arabia is currently in the process of witnessing the socio-economic impact of its information and communications technology (ICT) revolution. As fixed line penetration slowly increased, with the arrival of mobile technology, the sector has expanded in terms of reach. Mobile penetration has increased from 60 per cent in 2005 to close to 200 per cent until date. Saudi Telecom Company (STC) alone maintains close to 57 per cent market share and is the largest operator by some margin. On the broadband side, the penetration increased from nothing in 2005 to more than 50 per cent now, where STC's Saudi Net is responsible for managing 91 per cent of internet traffic around the country. This translates into quite a substantial net contribution to the development of the ICT industry in Saudi Arabia. STC has not just contributed to the industry in terms of increased penetration, but done so with enough efficiency to be declared as the world's eighth most profitable operator. Saudi Arabia is clearly viewed around the globe as an oil-based economy with not many other industries thriving similarly. However in recent years, telecoms has arrived on the scene as a true champion of progress. Shared vision has greatly contributed towards growth in the industry and specifically in STC. The Saudi government wants to develop a knowledge-based, digital economy and STC shares the same vision, to pass on the benefits of technology to everyone. This vision of access for all means that STC's mobile network coverage stands well above 90 per cent with fourth generation (4G) mobile technology penetration reaching levels beyond 80 per cent.

The coverage and penetration are critical because, according to various studies, a 10 percentage point increase in mobile penetration increases the long-term (per capita) growth rate for developing countries by around 0.6 percentage points per year. When STC started up in 1998, it's main focus was towards fixed line telephony. No one could have predicted, 15 years later, STC would be servicing a customer base of more than 170 million.

STC's foresight has helped transform Saudi Arabia from a telecoms desert to a networked oasis in a short span of time, serving all kinds of customers through customised solutions. The company has a very broad customer base, not just in terms of numbers but also in terms of segments. Individuals, small and medium sized enterprises, huge multinational business conglomerates as well as governments, are all STC customers in one form or another.

Looking at the overall investment on ICT being done in Saudi Arabia, a whopping 70 per cent of that investment comes from telecoms. Companies like STC, which rank among the top companies not just in the region but in the world in terms of adoption of modern technology, profitability and vision for the future have played a major role in developing state-of-the-art infrastructure in Saudi Arabia. As per estimates, the gross value added (GVA) of the telecoms sector, which consists of firms providing telecoms services, such as STC or other mobile operators is around two percent of the gross domestic product (GDP) and about four per cent of the non-oil GDP. In 2009 alone, investment in the telecoms sector created a total economic benefit of around SR60 billion ($16 billion).

Saudi market right now is a high potential ICT market and STC, through its quality infrastructure and product portfolio development aims to contribute massively towards this exciting future.

For more stories covering the world of technology, please see HispanicBusiness' Tech Channel

Source: Gulf, The (Bahrain)

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