Huawei Leads LTE Charge in Middle East

December 5, 2011

Earlier this week, Huawei Technologies announced that its company was the leader in setting LTE standards. While the company’s standing in this area could be debated, when it comes to LTE deployment partnerships in the Middle East, Huawei has featured prominently.

Ericsson and Cisco Systems have both predicted in the last few months that the Middle East is the region in world that will experience the most acute spike in mobile data consumption between now and 2016. Our forecast for Q3 2011 (see Exhibit) corroborates these estimates based on the increases being noted in mobile data ARPS, and declining voice ARPS, across the region. So what does this have to do with Huawei?

Exhibit: Voice and mobile data ARPS, select countries of the Middle East, 2011 and 2016

Source: Pyramid Research Q3 2011 Forecast

In September of this year, Huawei partnered with Saudi Telecom (STC), Zain Saudi Arabia, and Mobily for launches of the first LTE networks in the Middle East. Globally, LTE is being positioned as a solution for the anticipated data demand crush during the forecast period because of its greater data carrying capacity and speed. The top three mobile operators in Saudi Arabia all partnered with Huawei to provide the necessary technology to bring LTE power to increasingly data hungry customers. These deployments are an important win for Huawei because it allows the company to build credentials and further entrench itself with the largest operators in the region.

The choice to deploy TD-LTE technology in Saudi Arabia is mostly due to lack of licensing opportunities for the spectrum required for an FD-LTE network deployment. However, the use of TD-LTE technology has been questioned because of its perceived limitations, which could impact the scalability of these networks. A potential switchback to FD-LTE might be perceived as failure on the part of Huawei and better position other technology providers such as NSN and Ericsson, which have also built strong ties in the region. This is despite the fact that Huawei has also been active in the FD-LTE space and has partnered with Etisalat (along with Alcatel-Lucent and Ericsson) for an FD-LTE launch in the United Arab Emirates.

In our new Insider, LTE in the Middle East: Timing and Pricing Are Key, but So Is Device Strategy, we detail the present landscape of LTE in the Middle East and discuss the considerations related to timing and service pricing that operators must consider before making the decision to go the LTE route. We also make the case for developing an LTE ecosystem that includes a savvy device strategy. Pyramid Research projects that by 2016, there will be 18.3m LTE subscriptions in the Middle East (excluding figures for Kuwait), and if Huawei maintains its reputation, it could be a future beneficiary of this boom, especially if TD-LTE technology takes off in India and China, hence securing a sizable ecosystem.

— Ronda Zelezny-Green, Analyst

Asia-Pacific to Be Global Leader in LTE
LTE will be deployed in developed markets first where more customers are willing to pay for better service, with wide-scale deployments in emerging markets expected after costs for equipment, devices and handsets begin to decrease. Although the market share potential for LTE in emerging markets in the next five years is limited, due to its huge population we expect emerging markets to capture more than half of the LTE market share in Asia-Pacific by year-end 2016.

Mobile Operator KPI Forecast
The Mobile Operator KPI Forecast measures key performance indicators for up to six operators per country, and breaks down key mobile demand metrics at the operator level.