Industry Trend Analysis – Consolidation Bodes Well For Competition – JUNE 2014
Middle East Africa May 2014 / Bahrain / Industry
BMI believes that Kalaam Telecom‘s acquisition of Lightspeed Communications would boost competition in Bahrain’s fixed broadband market, which is presently dominated by incumbent operator Batelco. Although Kalaam intends to maintain its focus on the lucrative corporate market, we do not rule out a move into the consumer market in the future given the potential of IPTV and multiplay services to drive revenue growth from high-end consumers.
Kalaam completed the acquisition of 100% of Lightspeed, a subsidiary of Jordan Telecom, in April 2014 following regulatory approval. The financial details of the deal, which was agreed on March 10, were not disclosed. The deal makes Kalaam the second-biggest fixed broadband service provider in Bahrain, doubling its annual revenues and taking its customer base in the corporate segment to more than 4,000 businesses, equivalent to 17% of the corporate market. The company has set an ambitious target of 35% market share within the next three years, highlighting its capacity to challenge Batelco’s dominance.
Bahrain lags behind other GCC countries in the development of next generation broadband networks, partly due to limited incentive on the part of the incumbent to commit funds to the project. The government is seeking to redress this weakness with moves to deploy a national broadband network ( see ‘What Will Be Batelco’s Role In Bahrain’s NBN?’, March 3 2014). BMI argues that a Qatar-style plan in which the broadband network leases access to telecoms operators for retail services will best serve Bahrain. Should the government implement a similar plan, then a bigger alternative operator, which Kalaam has become following this deal, will be better placed to boost competition in the broadband market, leading to greater product development and competitive pricing.
Competition Will Drive Growth Bahrain Broadband Growth