Industry Trend Analysis - Fibre Deals Welcomed, But Independents Must Have A Stake - OCT 2017

BMI View : ITC ' s involvement in the government ' s national broadband expansion initiative is welcomed for two key reasons. First, it will better monetise infrastructure that has yet to fulfil its po tential. Secondly, ITC ' s involvement means that a lighter investment burden will be placed on incumbent STC. However, the lack of involvement - so far - of foreign-owned players means that transparency and accountability for the overall project is a major investment risk downside.

In a SAR3.5bn (USD930mn) deal, Integrated Telecom Company (ITC) will roll out fibre-optic connections to 640,000 residences across Saudi Arabia over a three-year period as part of the broader Saudi Vision 2030 development project. The aim is to establish an advanced high-speed broadband network capable of growing with an increasingly digital economy. The government is keen to use new technology to improve efficiencies, drive economic diversification and support emerging new industries. The new emphasis on fibre is welcomed because it will relieve pressure on the country's 3G/4G mobile networks to support massive increases in data traffic.

ITC will be supported by government financing, in the order of SAR1.3bn (USD360mn), most likely to assist with the deployment of last-mile (fibre-to-the-building/fibre-to-the-cabinet) connections that will link homes to ITC's 17,000km Saudi National Fiber Network. This backbone is used by other telecoms operators such as Saudi Telecommunications Company (STC), Zain and Mobily, as well as datacentre operators and large enterprises. Connecting homes and businesses directly into the fibre network, rather than indirectly though older and slower systems such as copper and 3G will allow for higher data transfer speeds, opening the market for a broader range of connected home/smart city applications that will underpin digital transformation.

Deeper Fibre Footprint Would Reduce Dependence On 3G/4G
Saudi Arabia Broadband Access Forecasts
f = BMI forecast. Source: BMI

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