KSA Telecom Market Outlook to 2030

KSA Telecom Market Overview

• The KSA Telecom Market is valued at USD 3 billion, based on a five-year historical analysis, driven by increased investments in infrastructure, growing smartphone penetration, and the rollout of 5G networks. The proliferation of IoT devices, combined with enhanced digitization across various sectors, such as banking, healthcare, and retail, has contributed to this growth.

• The dominant cities driving this market are Riyadh, Jeddah, and Dammam, primarily due to their large populations, high internet penetration, and government-led smart city initiatives. These cities are central hubs for business and technology, driving demand for advanced telecommunication services like 5G and fiber optics.
• The KSA government has set ambitious targets for digital transformation under Vision 2030, including the goal of achieving over 90% fiber-optic broadband coverage by 2024, covering 5.5 million homes. The government has also allocated SAR 15 billion to drive further advancements in 5G infrastructure, with the aim of positioning KSA as a global leader in digital connectivity.

KSA Telecom Market Segmentation

By Service Type: The market is segmented by service type into mobile data services, fixed voice services, and IoT services. Recently, mobile data services have dominated the market share due to the exponential increase in smartphone usage and the deployment of 5G technology across urban areas. Telecom operators like STC, Mobily, and Zain have invested heavily in LTE and 5G networks to meet the growing demand for high-speed internet and data services, particularly driven by the rise of e-commerce and digital communication.

By Transmission: The market is also segmented by transmission into wireline and wireless technologies. Wireless transmission, specifically 5G, dominates the KSA market, largely due to its ability to provide faster speeds and low latency. The government's push for 5G deployment has led to significant investments in wireless infrastructure by telecom operators.

KSA Telecom Market Competitive Landscape

The market is dominated by a few key players, with Saudi Telecom Company (STC), Zain KSA, and Mobily leading the charge in 5G deployments and network infrastructure. These companies have established strong partnerships with global technology firms like Huawei and Nokia to enhance their service offerings and support smart city projects.

KSA Telecom Market Analysis

Market Growth Drivers

• Increasing Demand for High-Speed Connectivity: The Kingdom of Saudi Arabia (KSA) is witnessing a sharp rise in the demand for high-speed connectivity due to an increase in digital consumption, especially in urban areas like Riyadh and Jeddah. By 2024, the Saudi Vision 2030 program aims to have nearly 90% of urban households connected to high-speed fiber-optic internet, catering to over 24 million internet users in the country, driven by government-led initiatives like the National Transformation Program.
• Expanding E-Government Services: The adoption of e-government services in KSA has been steadily increasing as part of Vision 2030s goal of digital transformation. In 2024, government portals will serve approximately 12 million Saudi residents, facilitating everything from healthcare to education. The expansion of these services is heavily reliant on the telecom infrastructure, further driving investments in the sector.
• Rising Mobile and Internet Penetration in Rural Areas: The government investment in rural internet penetration is driving demand for telecom services in the more remote regions of KSA. Approximately SAR 1.5 billion was allocated in 2023 to expand broadband services in underserved areas. By 2024, the goal is to connect more than 3 million people residing in these regions, boosting the demand for telecom services in these previously underdeveloped areas.

Market Challenges

• High Operational Costs for Network Expansion: Expanding telecom networks, especially to underserved and rural regions, comes with high operational and maintenance costs. In 2024, it is expected that telecom operators will invest over SAR 3 billion in maintaining and expanding the infrastructure, particularly 5G networks, across the country.
• Regulatory Hurdles and Spectrum Allocation: Regulatory challenges, such as complex spectrum allocation and licensing fees, continue to hinder telecom operators' growth. In 2024, telecom operators are expected to collectively spend around SAR 2.5 billion on licensing and spectrum fees, significantly impacting their profitability margins.

KSA Telecom Market Future Outlook

Over the next five years, the KSA Telecom industry is expected to show growth driven by the expansion of 5G networks, increasing demand for mobile data services, and the integration of IoT solutions across multiple industries.

Future Market Opportunities

• Surge in Data Center Investments: The next five years will see investments in data centers, with the number of centers expected to double by 2028, reaching a total of 24 across the country. Telecom operators will continue to play a key role in supporting the infrastructure, driven by growing demand for cloud computing and data storage from enterprises.
• Increased Focus on AI-Driven Telecom Solutions: Telecom companies in KSA will invest heavily in AI-driven solutions to enhance customer service, network optimization, and service delivery. By 2028, AI integration in telecom services is projected to support more than 8 million subscribers with personalized service offerings, leading to enhanced customer satisfaction and operational efficiency across the sector.