Mobile Usage And Utilization in Middle East , Presentation

1. The Middle East Mobile Sector:
A Battlefield Or A Land Of Opportunity?
Even In The Poorest Regions Of The Middle East Mobile Penetration Is Exploding.
Case Study: Developing Mobile Advertising Application Platforms For Middle Eastern
Countries.
Creo Marketing Communications

2. With mobile penetration rates of well over 100 per cent in several countries and deregulation still a
thorny issue in some parts of the region, you could be forgiven for thinking the Middle East offers
precious little in terms of opportunity for ambitious telco operators and yet, in reality, it is one of the
industry's fastest-growing markets.
The UK based research and consulting firm Analysis estimated the region's mobile sector
generated revenues of $22bn last year, while the figure should grow at a rate of 10 per cent per
annum over the next five years, reaching almost $40bn by the end of 2012.
Potential for growth
While some markets may have penetration rates of more than 100 per cent, there are still plenty of
countries within the region where GSM take-up is still extremely low, offering incumbent telcos and
new operators great opportunities for growth.
Indeed, Analysys has calculated that penetration as a whole across the Middle East stands at a
mere 34 per cent. Jones has identified one particular market where the mobile sector should take
off in the near future.'We have forecast the highest growth potential over the next five years to be
in the Egyptian market. With penetration currently very low compared to many countries in the
region, Egypt will experience very high subscriber growth rates. We expect active subscriber
penetration to reach over 65 per cent by 2012 and total mobile service revenue to shoot up,
growing almost 170 per cent between the end of 2006 and the end of 2012.'

3. Looking ahead
There is no doubt the Middle East's mobile sector will change hugely in the next five
years as more operators are licensed and deregulation continues. For Sinfield, the
development of new technology will also be a major feature.
'The evolution from 3G services to 4G will undoubtedly occur and this will factor into the
region's mobile landscape, leading to a greater convergence of services. Full quad
play service offerings will develop and mobile will cease to be a term synonymous with
cellular phones only.'

4. Competition Sees Middle East Telecoms Go Global
As Middle East markets liberalize, mobile operators are moving into lucrative new markets

5. Competition Sees Middle East Telecoms Go Global
As Middle East markets liberalize, mobile operators are moving into lucrative new markets
The landscape of the Middle East telecom market has changed dramatically in recent years.
A sector that was once dominated by state-controlled monopolies has now given way to a
Liberalized market that allows for open competition among regional and international operators.
The fierce competition for access to these markets has led to soaring prices for license fees, but it
should be a boon for consumers, who are likely to benefit from improved quality, greater services,
and better value in the long run.
The Middle East telecom market is by no means homogenous, as some markets are more
liberal than others. But the regional market as a whole has become more open to competition
driven in part by the requirements for joining the World Trade Organization.
Most Arab countries have gained accession to the Organization, which requires its members to
agree to liberalize their telecom markets.

6. Competition Sees Middle East Telecoms Go Global
As Middle East markets liberalize, mobile operators are moving into lucrative new markets
More Operators
The liberalization of the Middle East market has led to a proliferation of operators in the region.
Overall, there are more than 30 mobile operators in the Arab market, with many countries such
as Jordan, Egypt, and Saudi Arabia having three or more operators offering mobile services
, according to a recent survey by the Arab Advisors Group.
As Middle East markets have opened up, western companies, with saturated markets at home,
have been eager to gain a slice of the rapidly growing Arab sector.
The UK's Vodafone has a large presence in the Middle East, owning 55 per cent of Vodafone Egypt
, which is the largest mobile operator in country, and the Vodafone brand is used in Bahrain and
Kuwait via a partnership with Zain. The company also has recently bid for a license in Qatar.
Meanwhile, France Telecom (Orange) is a 71 per cent shareholder in Egypt's Mobinil and
the majority shareholder in Jordan Telecom, while French media conglomerate Vivendi is a 53 per
cent shareholder, and operator, of Morocco's Maroc Telecom. Western operators also tend to be
more price sensitive than their Middle East counterparts, making it more difficult for them to
compete as the costs for license fees skyrocket.

7. Competition Sees Middle East Telecoms Go Global
As Middle East markets liberalize, mobile operators are moving into lucrative new markets
MVNO's On the Horizon
Another development that could spur competition in the region is the potential emergence of
Mobile Virtual Network Operators (MVNOs), which are companies that provide mobile services but
do not have their own frequency allocation of the radio spectrum, or the infrastructure required to
provide mobile telephone services.
Jordan and Oman are the most likely countries to pioneer this new market in the region. 'MVNOs
are indeed around the corner, and they would certainly heighten the level of competition in the
short to medium run,‘
'They may emerge in different shapes and forms, ranging from basic resellers to full MNVOs.'
Analysts say customers will benefit by having greater choice of providers, more innovation,
improved quality of service, and better value for money.

8. Killer Mobile Applicationstelcos are always searching for the new killer application that will reap financial rewards

9. Killer Mobile Applications
From its humble - if revolutionary - beginnings as a communication device when on the move, the
mobile phone has come a long way. Today, speaking on the mobile is almost a minority usage,
there are so many applications on offer.
For the Middle East, with mobile phone coverage ramping up rapidly, phone use, like the rest of the
world, can be starkly different. This split can be between the countries and equally between young
and old.
But the make up of the Middle East also means some services that would be less popular in other
parts of the world can succeed here. One of the hold grails for mobile phones has long been the
idea of using them for micro-payments. Although that is still not happening here yet, the first steps
are being put in place.
Micropayments
For instance, the Salik road toll in Dubai. Road users aren't able to pay for the toll via their
phone yet, but do get a text message when their account is low. It's not such a big step now for
the service to done on a mobile, where users text back their top up, which is then added to their
phone bill.
O2 in the UK recently began a six month trial of technology to offer cashless payments via a
mobile phone. Participants have been given phones using a system called Near Field
Communications (NFC), and can pay for transport or purchases under $20 using it.

10. In Dubai , Etisalat recently launched its service to allow workers to use their phones to send money
back to their home countries. It may not be the obvious, headline grabbing killer service, but it is
likely to prove successful among some chunks of the emirate's expat community that want to
regularly transfer money. Initially aimed at workers from the Philippines, Pakistan, India and Egypt,
Etisalat started with a deal with Smart Telecommunications in the Philippines, and is spreading the
service to other regions.
Khalifa Hassan Al Shamsi, vice president of marketing for consumer and SMB at Etisalat, recently
told AME Info: 'People send money back home at money exchanges. We think we can provide a
simple method to send this money home, so that there's no need to travel across town or for
spending time standing in line [at an exchange].'
the technology would 'fundamentally change the way people use their mobile phones'.
Killer Mobile Applications

11. Original killer: humble SMS
The first hot application for mobile phones turned out to be the simple SMS, and even today it
continues to be a well-used application (in our survey it was the most popular mobile application .
The phone companies confidently predicted that picture messaging, or MMS, would replicate this
success, only to see the service fall flat on its face. It suffered from being too expensive in the eyes
of users and never really recovered. The failure of MMS is but one of the 'killer' mobile applications
that have come and gone without setting the market alight.
Mobile TV, much touted over the past few years, has also stumbled as customers have found that
while it may be a nice to have application, it's not a hot, 'must-have' application
Killer Mobile Applications

12. Online Advertising Spending
Surges in the Middle EastLarge Internet companies are taking note of the region's recent vigor, and a potential surfing population of 300 million in 22 countries

13. Online Advertising Spending Surges in the Middle East
Over the past two years companies have begun to increase spending online, taking advantage of
the growing number of Internet users and inexpensive multimedia technologies to advertise their
products.
Spending on online advertising in the Arab world may surge to about $400 million within four years
from about $90 million in 2009, said Samih Toukan, chief executive of Jabbar Internet Group, which
owns online businesses such as e-commerce website Souq.com. That's in contrast to the recent
performance of online advertising worldwide, which fell 2.4 percent in 2009, to $26.4 billion,
research group IDC said in March.
A growing number of Arab businesses are "looking at the return on their [ad] investment and the
Best way to track that is online,“
Large Internet companies are taking note of the region's recent vigor. Last year, Yahoo!,
owner of the second-most-popular U.S. search engine, paid $164 million for Arabic-language
Internet venture Maktoob.com, which owns e-mail, search, auction, and entertainment websites.
"There is a lot of room for advertising to grow, unlike other mature markets," says Ahmed Nassef,
managing director for Yahoo! in the Middle East.
"The numbers are there, and we have a vibrant advertising market" of as much as $9 billion in the
Gulf Arab countries and elsewhere in the region, he says. Ad sales at Yahoo! Maktoob expanded
more than 50 percent in 2009, says Nassef.
That's pushing many online ad and content companies to tap the mobile phone market, which
has more than 230 million users in the region,

14. Mobile Advertisements Likely To
Grow By Leaps And Bounds

15. Mobile Advertisements Likely To Grow By Leaps And Bounds
While the UAE's telcos already have such mechanisms in place, in Saudi Arabia STC will soon launch
"permission-based" advertising in which mobile subscribers can opt in or out of the sponsored
services. They can also be assured that none of their personal information will be shared with
third-party advertisers. For advertisers it offers a means of creating messages that would be in sync
with user profiles.
"Opt-in models will ensure that mobile wins confidence and trust as "the" most effective medium
that offers targeting capabilities that no other channel can offer. "The convergence between
telecom operators and media is leading operators to become increasingly more involved in mobile
advertising. It had been an unregulated space with telcos, which allowed businesses to abusively
send bulk SMS messages to unsuspecting customers.
"But this rapidly growing channel holds great opportunities to generate positive responses.“
Intigral is running enrolment exercises based on segmentation and lifestyle mapping for clients and
partners ahead of the roll out of STC's mobile advertising service.
"This represents an opportunity to end-users to have a say in the type of ads they receive on their
mobile phones, while providing advertisers with a highly segmented database of customers who
desire receiving targeted and relevant commercial messages of value," Marteau added.
Advertising and marketing spend on digital platforms is growing at 20 to 30 per cent year-on-year in
the Middle East and North Africa markets. In dollar terms, this category is estimated at around
$150 million (Dh550.89 million) during 2011, according to unverified data.

16. Mobile Advertisements Likely To Grow By Leaps And Bounds
"Although most Arab media companies have been experimenting with online platforms,
monetisation remains a challenge,”
"Most regional advertisers have not yet built up significant experience or understanding of the
benefits of investing and consumers in Mena [Middle East and North Africa] — more so than
international markets — are not yet ready to pay for digital content.“
It is also a fact that despite this, tariffs on digital advertising are higher compared with those
in the US or some European markets. But a time will come - in five years or so based on more
bullish projections - that digital could represent 10 to 12 per cent of the overall ad revenues
generated.

17. Advertising Spend In The Gulf Rises To A Record USD 6.8 Billion
The advertising spend in the GCC recorded a significant increase from USD 2.4 billion in 2002 to USD 6.8
billion in 2010.
Khamis Al Muqla, Chairman and Managing Director of Gulf Saatchi & Saatchi and Board Member
of the IAA Worldwide said, " The PARC (Pan Arab Research Centre) figures indicate that the Pan
Arab Media which constitute mainly of satellite channels, accounted for 87% of the total TV
Advertising. TV advertising accounted for 50% of the total expenditure, followed by print 45%
(Newspaper 34%, Magazine 11%, Outdoor 4% and Radio 1%)."
"Print media is still the main vehicle for the local markets like Bahrain and Saudi Arabia.
Saudi Arabia alone accounts for the largest print expenditure in the Gulf, accounting for 84%.
(Newspaper 74%, Magazine 10%).
The same applies for Emirates. With the expenditure on Print accounting for 68%
(Newspaper 52%, Magazine 16%) and Television 20%, Outdoor 8%, Radio 3% and Cinema 1%.“
The increase in advertising expenditure was between 4.5% to 26%.

18. Advertising Spend In The Gulf Rises To A Record USD 6.8 Billion
In Saudi Arabia, the increase was from $ 477M to $ 499M representing an increase of 4.5%, followed
byUAE from $ 355M to $ 446M an increase of 25.6%, Kuwait from $ 280M to $ 303.5M an increase of
8.3%, Bahrain from $77M to $86M an increase of 11.4%, Qatar from $ 49.9M to $ 56M an increase of
2.2% and Oman recorded a 26% increase from $ 43M to $ 54M. Oman and UAE witnessed more
growth than the others, followed by Pan Arab media which had a 19.9 % increase.
" The advertising spend in the Gulf has witnessed continuous growth over the last 10 years. What
started as $ 607M is now $ 2.8billion. The level of growth is expected to continue due
to economic development, open market policies and increased competition. In addition, local
advertisers have also been active in the banking, telecom, travel and tourism, shopping festivals,
govts, and diary sectors. However the per capita advertising expenditure is still quite modest
compared to markets in other countries." Mr. Al Muqla added.
Saudi Arabia accounts for 45% of Gulf ad spend
According to the Saudi Arabia's Undersecretary for Information Abdul Rahman Al-Hazaa,
the kingdom accounts for 45% of the advertising market in the Gulf, which is now worth S$2.2 billion
in total.
"I expect that the Kingdom will soon rank 43 in the global advertising market, with a total volume of
over $2 billion, "he said.

19. Advertising Spend In The Gulf Rises To A Record USD 6.8 Billion
Mobile Advertising Grows More than Expected
Marketers have increasingly been spending more on mobile and with good success.
A 2011 IAB study, “Marketer Perspectives on Mobile Advertising, showed 63 percent of marketers in
retail, travel, financial services and other industries increased their mobile marketing spend over
the past two years, Not only that, 29 percent of those marketers reported an increase of over 50
Percent in mobile.
Mobile advertising includes mobile paid search ads, mobile display ads, ads delivered through
location-based services and text message ads. The IAB predicts continued mobile growth,
as 72 percent of the 300 marketers surveyed planned to increase their mobile advertising budget,
with 35 percent of them admitting to increases over 50 percent.
Fifty-one percent of the marketers surveyed said mobile advertising was an integral part of their
Overall advertising strategy. The other 49 percent said they were very interested in mobile
Advertising (35 percent are experimenting with mobile, while 14 percent use mobile ads on an
ad hoc basis).
The survey also queried marketers on what types of mobile devices they are targeting,
and results are shown below:
• 60% smart phones
• 31% tablets
• 22% feature phones
• 10% e-readers
• 3% game devices