Zain currently holds a dominant market share position for 5G Fixed Wireless Access (FWA) services in Saudi Arabia. A year after its October 2019 5G launch in the Kingdom, Zain has almost a 60% share of the 5G FWA market, based on our estimates. This contrasts with its 19% share of the mobile market.

In Q3 2020 Strategy Analytics estimates that Zain generated over 6% of service revenue from 5G FWA. Accounting for less than 1.5% of Zain’s customer base, its 5G FWA subscribers generate a monthly ARPU of approximately SAR340 (USD90) compared to SAR78 (USD22) for its mobile base. Its average daily usage increased from 8,241TB in Q1 2020 to 9,148TB in Q2, equivalent to a world-leading average monthly usage per subscription of 32.8GB and 37.8GB. Those averages are a significant increase from 15.5GB in 2018 and 19.4GB in 2019, with FWA playing a strong supporting role there.

Unlimited 5G FWA pricing is almost identical between the Kingdom’s operators. Both STC and Mobily charge SAR402.5 per month (USD107) with Zain charging SAR401.35. All three operators are using Huawei 5G CPE. There are also 100GB 5G FWA plans for SAR287.5 (USD77) at Zain and STC. Those unlimited plan prices are broadly in line with 200Mbps fiber services: Zain and STC have price parity between 5G FWA and 200Mpbs fiber, while Mobily’s fiber plan is cheaper at SAR345 (USD92) and Integrated Telecom is in the middle at SAR379.5 (USD101). This makes much of the choice between fiber and 5G down to availability, rather than price or speeds. However, there are more fiber options extending from 100Mbps services at SAR287-321 (USD77-86) to 500Mpbs services at SAR920-1150 (USD245-306).

Some of the reasons for Zain’s FWA success can be found in a recent report from Saudi Arabia’s regulator, the Communications & Information Technology Commission (CITC), which paints an interesting picture of fixed and mobile network performance in Saudi Arabia. CITC’s quarterly report for Internet speeds and digital content access speeds uses speed test data from Ookla and fixed Internet speed and measurement data collected through a partnership with SamKnows.

In a market with a high degree of service provider uniformity in pricing, network quality obviously becomes a key differentiator and 5G is opening up new opportunities. Based on market data from the Kingdom and those network speed test results we see a snapshot of a market where:

• There were 2.03 million fixed broadband connections at the start of 2020, a household penetration of 33.3%. So still significant opportunity for FWA to supplement mobile broadband adoption across the country.
• Zain has a significant 5G network coverage lead over its competitors in terms of regions where it has deployed 5G.
• Zain’s 5G FWA launch helped it jump into first place for fixed Internet download speeds by Q1 2020 and it has held that position throughout 2020.

Those first two factors combine well to explain some of Zain’s 5G FWA success. Of the 136 governates (administrative districts) in Saudi Arabia, 5G services have been deployed in 44. Zain has a significant lead here in terms of its reach, providing 5G services in 44 governates compared to Mobily’s 16 and STC’s 7. Zain reported a 5G population coverage of 46% in June 2020. In a country where 67% of households do not have fixed broadband access (and within the 33.3% that do have access, around 20% use a fixed wireless service), 5G coverage opens up new service opportunities. 5G offers a strong role for super-fast broadband alongside fiber services and an ability to fill a significant gap: CITC’s recent Open Access initiative brings together the fiber assets of the Kingdom’s six operators, though still represents a footprint covering only 50% of households. And Zain’s FWA success is not just linked to bringing 5G into unwired communities, it is also performing well in Riyadh where it has a 5G network performance lead in terms of download speeds and latency, which is translating into a clearer fixed Internet performance lead.

That significant role that 5G FWA is playing in Zain’s fixed broadband strategy is built on its focus on 5G network coverage and performance. Average fixed broadband download speeds in Saudi Arabia in Q3 2020 were 70.4Mbps: Zain leads the market at 110.9Mbps (across all technologies), a full 31% faster than 2^nd placed Integrated Telecom at 84.8Mbps, with Mobily averaging 76.7Mbps and STC 62.1Mbps. In terms of digital content access experiences over fixed Internet, its higher mix of 5G FWA within its fixed broadband base has not disadvantaged Zain:

• it has a video streaming quality score of 99.87%, in 4^th place behind the 99.99% scored by Integrated Telecom.
• it places 2^nd on latency for social media platforms.
• it places 1^st or 2^nd on latency for popular video games (ranking depends on game title).
• it places 2^nd or 3^rd on latency for popular video conferencing platforms.

In the 5G market, it is the coverage where Zain really stands out. STC has led the market in terms of average 5G download speeds, though the gap closed significantly in Q3 both in terms of overall averages (ranging from 428Mbps at Zain to 496Mbps at STC) and averages for the top 10% of speed tests (ranging from 871Mbps at Zain to 929Mbps at Mobily). Zain has that strong coverage lead in terms of governates with services and also based on the percentage of 5G sites in each region, ranking 1^st in every region as shown in the graphic. As we see 5G smartphone adoption increase, sustaining these high average speeds will help to satisfy customer expectations, but delivering 5G coverage in more cities across the Kingdom will also be critical, as will ultimately extending coverage to sub-urban and rural communities.

Zain has built a strong 5G FWA business in Saudi Arabia, delivering a value proposition providing a healthy uplift to its service revenue. With limited differentiation in terms of pricing and broadly similar 5G network speeds across the operators, Zain has been able to carve out a high 5G FWA market share built largely on its higher network coverage. Last month, Zain won ‘Best 5G User Growth’, ‘Best Cloud Provider’, and ‘Best 5G Infrastructure Deployment’ at the Telecom Review Excellence Awards 2020, a great recognition of it deploying and maintaining a state-of-the-art 5G network.

All the operators' coverage plans will come under greater scrutiny in 2021 as the range of affordable and desirable 5G smartphones increases further in the Kingdom and Strategy Analytics believes that both STC and Mobily should use that mobile broadband requirement as an opportunity to increase coverage and address the FWA opportunity outside of (and alongside) their fiber footprints.