Tawal recently bolstered by the Public Investment Fund’s acquisition of a 51% stake from Saudi Telecom Company, now operates one of the region’s largest telecom tower networks with approximately 30,000 sites. This strategic expansion is crucial for advancing the rollout of 5G technology and enhancing network coverage and capacity across the kingdom. Similarly, TASC is focusing on optimising tower operations and integrating new technologies to support the growing demand for high-speed connectivity. LATIS complements these efforts by leveraging cutting-edge solutions to enhance tower performance and reliability, positioning itself at the forefront of technological innovation in the sector.
As the industry evolves, there is a notable emphasis on energy efficiency and digital transformation. Tower companies are investing in sustainable practices, including advanced cooling systems and renewable energy sources, to reduce operational costs and environmental impact. The adoption of state-of-the-art Base Transceiver Stations (BTS) and smart management systems reflects a commitment to improving network performance and service delivery. This focus on technology and sustainability is crucial as Saudi Arabia advances its Vision 2030 goals, driving the future of digital connectivity and infrastructure in the region.
Market Drivers
Urbanisation and Population Growth: Saudi Arabia's urban population is forecast to rise from 32.82 million in 2023 to 36.24 million by 2028. This growth spurs demand for enhanced telecom infrastructure, including 3G, 4G, and 5G towers, to support the increasing number of internet and mobile users in expanding urban areas.
Technological Advancements: The deployment of 5G technology and the anticipated shift to 5.5G are key growth drivers. The Communications, Space and Technology Commission (CITC) predicts that 5G and Wi-Fi 6E technologies will significantly boost GDP, from USD 4.7 billion to over USD 18 billion by 2030. Saudi Arabia’s leadership in 5G adoption and the expected rise in 5G users reflect rapid technological progress.
Investment in Infrastructure: Major investments are propelling market growth. For instance, in January 2024, the e& Group committed USD 6 billion to enhance digital solutions in Saudi Arabia. This investment aims to improve network accessibility and affordability, aligning with Saudi Vision 2030’s focus on digital transformation.
Internet and Mobile Penetration: As of early 2023, Saudi Arabia had 36.31 million internet users, with a 99% penetration rate. Mobile connections accounted for 115.9% of the total population, indicating widespread adoption of mobile technology. The high penetration of smartphones and IoT devices further drives demand for advanced telecom services.
Megaprojects: Smart cities and megaprojects are key market drivers in the Middle East, as they align with the region's ambitious visions for economic diversification, technological advancement, and sustainable development. These initiatives, such as Saudi Arabia's NEOM and the UAE's smart city projects, are designed to attract global investments, boost tourism, and create high-tech jobs, positioning the Middle East as a leader in innovation and infrastructure. By integrating cutting-edge technologies like AI, IoT, and renewable energy, these projects aim to improve the quality of life while addressing urban challenges, ultimately driving long-term economic growth in the region.
Market Challenges
Economic Pressures: Declines in employment within oil-dependent sectors and reduced disposable incomes have led to shifts in consumer spending. Many are opting for more cost-effective telecom packages, which could impact the average revenue per user (ARPU) and challenge telecom providers in maintaining profitability.
Inflation: Rising inflation may increase operational costs and service prices, potentially affecting consumer affordability and overall market growth.
Competitive Landscape
The Saudi telecom tower market features several key players:
Saudi Telecom Company (STC)
Integrated Telecom Company (SALAM)
Etihad Atheeb Telecommunications Company (GO)
Zain KSA
Mobily (A subsidiary of UAE-based e&)
These companies are expanding their service portfolios through partnerships, technological upgrades, and strategic investments.
STC and TAWAL: In April 2024, Saudi Arabia's sovereign wealth fund, PIF, acquired a 51% stake in Telecommunication Towers Company Ltd (TAWAL) from STC. This move is set to establish one of the region's largest telecom tower companies, with around 30,000 mobile tower sites.
5G and Beyond: In February 2024, Zain KSA signed an MoU with Huawei to advance 5.5G technology. This collaboration aims to enhance connectivity with improved speed and latency. Zain’s 5G plans and the 5.5G City Innovation Project highlight their commitment to telecom innovation. TAWAL doing 5.5G modular small cells
Partnerships and Innovations: In March 2024, Ericsson and Mobily signed an MoU to explore Open RAN principles, enhancing network flexibility and efficiency. Similarly, the October 2023 collaboration between Zain Saudi Arabia and Nokia focuses on next-generation ultra-broadband networks.
Future Trends
Mobile networks: Significant growth is expected in mobile networks, driven by rising smartphone penetration and demand for high-speed data. The expansion of 5G and fibre networks will continue to drive market growth.
Data and messaging services: Growing demand for data and messaging services is supported by high-speed internet and fibre networks. Investments in fibre infrastructure, such as Dawiyat Integrated Telecommunications' USD 2.6 billion plan, will further boost connectivity.
Digital transformation: The digitalisation of business processes and the evolution of 5G networks are accelerating demand for data services. The surge in online communication and digital activities will fuel market growth.
Conclusion
The Saudi Arabian telecom tower market is experiencing rapid growth and transformation, driven by population growth, technological advancements, and significant infrastructure investments. Despite economic and inflationary challenges, the sector's strong growth prospects and ongoing innovations underscore its potential as a key player in the global telecom landscape. As Saudi Arabia moves towards its Vision 2030 goals, the telecom industry will play a crucial role in shaping the region's digital connectivity future.
