Wataniya Mobile Palestine: MEED Assessment

19 September 2011

With one of the region’s lowest penetration rates, the Palestinian mobile market boasts one of the strongest growth potentials in the region

With a strong brand and investment to back it, Wataniya will offer strong competition to Jawwal in the future.

The strategic link to the Wataniya’s parent company Qtel – active in 16 countries – delivers both technical expertise and benefits in the procurement process. The investment from the PIF is another source of strength.

The firm’s operational lifespan is too short to make comment about its financial performance. Wataniya’s CEO Bassam Hannoun says 2011 figures show continuous growth in customers and revenues. The first-half loss of $15.8m is after depreciation and amortisation expenses were included.

However, with its 417,000 subscriber base – still low compared to the 2 million boasted by its rival Jawwal – Wataniya passed the breakeven point. It saw a 168 per cent growth in revenues in the first half, in line with the 71 per cent increase in the number of subscribers.

Average monthly revenues a subscriber grew to $13 in the same period compared to $10.50 in the first half of 2010.

Among the stronger figures reported in the first half of 2011 was a 39 per cent increase in gross margins, compared with a 16.6 per cent decline in the same period in 2010. That improvement reflects the doubling in revenues seen in the first six months.

The company has had a tough time obtaining the necessary frequencies from the Israeli authorities. Despite this, Wataniya’s management, has overcome that obstacle and the company should be on course to begin services in the Gaza Strip next year, which would open up a significant new market.

Of course, any major business in Palestine will face a political risk premium. Political events could still frustrate the company’s expansion ambitions, particularly if the Israeli authorities decide to make an issue of the Palestine bid for statehood.

But with a strong service built up quickly, Wataniya should stand a strong chance of winning market share from Jawwal and beat off the four illegal Israeli mobile operators that continue services in the Palestinian market.


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