UAE leading telecom infrastructure practice in region: Frost & Sullivan

Frost & Sullivan, the research firm that provides in depth sector and country specific market analysis today held an analyst briefing session to discuss the growth of wireless and broadband technologies in South Asia and the Middle East.

Titled, “The South Asia & Middle East Telecom Infrastructure”, the session detailed the past, present and future of Wireless and broadband technologies across six countries, namely India, Bangladesh, Sri Lanka, UAE, Saudi Arabia and Egypt.

According to this briefing and the ensuing industry analysis, the UAE and other Middle Eastern countries like Saudi Arabia and Egypt are leading the drive towards developing an efficient and innovative telecom infrastructure.

According to industry analyst, Aandal Margabanthu said, “The study details Wireless network infrastructure and broadband infrastructure in the region. Research is based on the number of telecom towers and Base Transceiver Stations (BTS) as well as upcoming access technologies and cable infrastructure in the region. The study doesn’t include backhaul network requires, other network requirements like microwave links and broadband equipment installations.”

The presentation discussed the basic divisions of Wireless infrastructure into passive infrastructure or the non electric components like towers and pylons, backhaul infrastructure that is the connection between each BTS and Base Station Controller usually through microwave or optical links and active infrastructure which includes BTS, antenna, microwave equipment, transceiver and signal processing devices.

“In the current environment, where infrastructure sharing is the industry buzzword and infrastructure can be shared across levels ranging across passive and active infrastructure though site sharing, mass sharing, antenna sharing, roaming, radio access network sharing and spectrum sharing,” explained Margabanthu.

She went on to discuss the major drivers for the telecom infrastructure growth. In Margabanthu’s opinion, the first of these drivers is the growth in the number of mobile subscribers fuelled by the increased affordability of services and mobile devices.

The deployment of next generation technologies like 4G and LTE which is also seen as an element that will positively impact the growth of the infrastructure and the number of users of these technologies. According to her, the next driver for growth of Wireless technology is the increased data usage and value added services like social networking, audio and video streaming, these have contributed to increased usage of wireless services and also impacted data traffic.

“The increased usage of the Internet for value added services is then fuelled by the favourable demographic categories in the region, while South Asia is home to a significant sector of persons aged under 30, the Middle East is home to a large majority of expats, both of these segments are seen as fuelling the need for constant connectivity, driving the focus on the enterprise vertical requiring Internet on-the-go,” she explained.

“The final driver, is the focus on quality of service driven by increasing competition, which in turn drives the use of Wireless and broadband technologies to provision and ultimately retain the customer,” said Margabanthu.

According to her, the growth of Wireless technologies is challenged by the decreasing average rate per user (ARPU) and the increasing capex and opex associated with costs of steel, fuel and other material costs that have a negative impact on the operator’s margins eventually leading to operators crunching back on expenditure on their network infrastructure.

“Worldwide adoption of infrastructure sharing practice, to curtail the operator expenditure, may also affect the industry and growth of this segment,” she said.

Based on the drivers and restraints mentioned earlier, Frost&Sullivan predicts that the number of estimated Wireless subscribers in the SAME (South Asia and Middle East) region will grow from 973 million in 2010 to a 1777 million by the end of 2017, witnessing a CAGR of 9%, while the number of towers in the region are expected to go from 0.42 million to 0.6 million, reporting a CAGR of 5%.

Margabanthu also believes that the SAME region will witness a shift from voice services to data services, predicting that 80% of an operator’s revenue will originate from providing innovative and competitive wireless data services.

Much the same drivers and restraints seem to affect the growth of broadband technologies in the SAME region, Frost & Sullivan said that on both counts the Middle East region seems to be comparatively better developed in terms of telecom infrastructure than the emerging markets of South Asia. “The government strategy to enable constant and 100% connectivity across all sectors of the UAE, KSA and Egypt has no doubt contributed to the explosive growth in the use of broadband and wireless services. This may be because the governments in these regions understand that the timely provision and availability of these technologies will have a direct impact on the country’s GDP,” said Rahul Agarwal, Industy Analyst, Frost & Sullivan.

The research firm reported that the number of broadband users in the UAE will grow at a CAGR of 200% from 2010 to 2017 leading the pack, followed by KSA at a CAGR of 90% and Egypt at 30%.

While wireline broadband usage in the UAE is expected to grow at a CAGR of 20% in the same time span, fuelled by the increase in mobile broadband subscribers, wireless broadband usage is expected to grow at a CAGR of 200%.