Middle East Gets First MVNOs

In their continuing efforts to crank up competition among operators, telecom regulators in the Middle East have begun giving the green light to mobile virtual network operators (MVNOs).

Jordan's Telecom Regulatory Commission was first out of the gate, awarding an MVNO license to Saudi Arabia-based i2 in May. (See i2 Receives Jordan License.) i2 will compete with the country’s four other mobile operators, led by Jordan Telecom (Orange). (See Who Does What: Middle East Carriers.)

In Oman, the Telecommunications Regulatory Authority (TRA) said in a statement over the weekend that it has given MVNO licenses to five companies: Injaz International, Kalaam Telecommunications, Majan Telecom, Mazoon Mobile, and Arab Link, having signaled its initial approval back in January. (See Oman Issues MVNO Licenses.)

Friendi Mobile , which received its license through Arab Link, is looking to set up MVNOs in 16 countries across the Middle East and North Africa and to that end is in negotiations for more licenses.

In Oman, the new operators will be leasing capacity from state-owned incumbent Oman Mobile Telecommunications Co. LLC and rival mobile operator Nawras . If all five MVNOs make it off the ground they'll be vying for a piece of a growing but small market -– according to the TRA, Oman had 2.83 million mobile subscribers at the end of May, in a population of 3.3 million.

There are signs that other regulators in the region are mulling opening their markets to MVNOs, such as in Egypt and Saudi Arabia where i2 is looking to launch services.

Saudi-based HiTs Telecom , which is investing in countries throughout the Middle East and Africa, is keen on the MVNO model. While it waits for regulatory developments in the region, it's expanding into Europe where MVNOs are well established, acquiring a 51 percent stake in Spain's Metrored Móvil. (See HiTs Telecom Seeks to Raise $300M.) The companies will invest $15 million to launch an MVNO as Hits Telecom Spain in September that will run over Vodafone España S.A. 's network.

Some regulators are putting off the MVNO model for now to introduce more network-based operators. In a strategic review issued in June, Bahrain's Telecommunications Regulatory Authority (TRA) said it plans to issue a third mobile license, and "[h]aving decided to allow another infrastructure-based mobile network operator, regulatory intervention to facilitate MVNOs entry would be inappropriate and disproportionate for the time being. Licensing requirements for MVNOs will be addressed as part of the move to a unified licensing which TRA expects to complete by Q2 2009."

Qatar ended the region's last monopoly by awarding its second mobile license to Vodafone Group plc (NYSE: VOD), officially handing over the document Sunday. (See V'fone Receives Qatar License and Vodafone Plans Qatar IPO.)

There are still a handful of infrastructure-based licenses to be had as regulators embark on their second or third rounds of liberalization: Qatar is preparing to offer a second fixed-line license; Egypt is in the process of auctioning its second, having put off its deadline for bids from mid-June to July 29; Iran is in talks with operators interested in its third mobile license, and Syria expects to offer a third mobile license in 2009.

— Nicole Willing, Reporter, Light Reading