The poor cousin to its GCC neighbours, Yemen's gross domestic product (GDP) per capita is among the lowest in the Arab world. Unsurprisingly then, while Saudi youths play with the latest third-generation (3G) camera phones, few Yemeni nationals even have access to a mobile handset. Penetration stands at less than 10 per cent, but for those plugged into the country's cellular sector, the picture over the past two years has been one of rapid change.
Mobile telephony first reached Yemen in 2001, with the entry that year of two GSM operators - Spacetel and Sabafone. Spacetel, which had 884,000 subscribers at the end of 2005, is 42.8 per cent owned by Beirut-based Investcom, with the remainder by local private investors. Sabafone, with 925,000 subscribers at the end of last year, is 55 per cent owned by the local Al-Ahmar Group, 10 per cent by the Hayel Saeed Group, also local, 5 per cent by Athens-based Consolidated Contractors International Company (CCC) and the rest privately.
Competition is hardly cut-throat. 'Each company offers a single pre-paid and post-paid package and provides most of the services possible within the technology - MMS, SMS, downloads, TV and so forth,' says Saif al-Nimri, former analyst at Amman-based Arab Advisors Group. 'They have similar market shares and similar prices, and when one offers a new service, the other will follow.' Given market conditions, the launch of 3G is a low priority in Yemen. Both operators have vague plans to introduce the technology, but by 2008 at the earliest.
However, this sleepy world was thrown into flux recently. After talking about tendering a third mobile licence, the government in late 2004 instead launched Yemen Mobile, a wholly owned subsidiary of state-owned Public Telecommunications Company (PTC). Oddly, Sanaa decided to base it on the rare US code division multiple access (CDMA) platform, a technology barely known in the region except in the context of a short-lived controversy in Iraq when the US-led Coalition Provisional Authority in 2003 briefly considered the technology during the tendering of mobile licences.
'What the PTC did was essentially to convert the wireless local loop operated by TeleYemen [the state-owned fixed-line operator], which was based on an Etacs analogue system similar to a cellular one, into Yemen Mobile,' says Al-Nimri. 'CDMA seems to have been chosen purely because it was the latest technology. The operator has talked periodically about changing to GSM, although without yet having taken any action.' Yemen Mobile had about 500,000 subscribers at the end of June and is aiming to double that by year-end.
To add further novelty, the government launched an initial public offering (IPO) of 45 per cent of the operator's capital in late July, despite Yemen having no stock exchange. Shares, which went on sale at YR 500 ($2.50) plus a YR 10 ($0.05) subscription fee, will be traded through the arranging banks - Agricultural Co-operative Bank, National Bank of Yemen and Yemen Bank for Reconstruction & Development - and should raise YR 43,260 million ($218.5 million) to invest in the company's network and services. The process, however, was rather opaque. 'The prospectus is two pages long, and doesn't even say when the IPO is due to close,' says one prospective investor.
ConfusionA degree of confusion was perhaps to be expected. The path of reforming the country's mobile sector is developing a habit of being somewhat disorganised, in line with the reputation of the Communications & Information Technology Ministry, which is overseeing the process. It was certainly in evidence when the open tender of a further mobile licence did finally go ahead in late 2005. Six operators bid, with the highest price - by a long chalk - of $149 million offered by the Chinese/local United Yemeni Telecommunications Company (Unitel). The company was duly awarded the licence.
The impression that price had
