New report skeptical about the prospects for satellite mobile communication in the Arab world

A research note, released today by Arab Advisors Group, paints a bleak future for the much-anticipated satellite based mobile communication services that will be launched by UAE-based Thuraya Satellite Telecommunications Company.

AMMAN, Jordan, Feb. 25, 2001 -

Arab Advisors Group, a specialized strategic research company on telecommunication, Internet, and technology in the Arab world, released today the findings of a new research note that analyses the prospects and potential for satellite-based mobile communication in the Arab world in anticipation of the launch of a new service by Thuraya Satellite Communication company that is expected anytime during the upcoming two months.

The research note, which was released to the subscribers of Arab Advisors Group Strategic Research Service, and is available for purchased online through the company’s website (www.arabadvisors.com) sheds light on the economics and finances of the service, and analyses the potential for its subscription service.

According to the report, Thuraya Satellite communications, which is owned by eleven Arab Telecom Operators (mostly government owned) and seven other strategic shareholders (including ArabSat), who launched its geo-synchronous satellite in October 2000 has already invested US$ 1.2 billion to date in building the infrastructure for the service and in operational cots.

"Satellite-based communication services company such as Thuraya and Global Star have been trying to shield themselves from the negative publicity that the sector was subjected to in the much publicized bankruptcy Iridium LLC, which was taken over by Iridium Satellite LLC in December 2000." Said Ahmed Naser, an Arab Advisors Group analyst.

The report details the positive differentiators that Thuraya enjoys including its focus on a limited coverage area, value added services, lower cost of infrastructure, and how the company is structuring its tariffs to be as competitive as possible.

However, Arab Advisors Group concludes in the research note that it will be extremely tough for Thuraya to compete with the increasingly competitive costs of regional GSM roaming services, and the established user based of local cellular services operators in the region.

Arab Advisors Group also discusses in the research note the changing landscape of cellular services in the region, and its inevitable effect on Thuraya’s business model. According to the report, "the decision to establish Thuraya was made well before the GSM boom that the World witnessed in the last three years. It is understandable that Thuraya will continue with its business plan and hope for the best. Everyone must acknowledge, however, that the GSM boom was the disruptive technology that radically changed the very market that Thuraya hoped to serve".