Tech

Kuwait’s private sector to aid final broadband push

November 1, 2023

Part of digital transformation
Likely interest from infrastructure firms
Businesses to be main beneficiaries

Kuwait is looking to the private sector to help roll out the final stage of a national fibre-optic broadband project that forms part of the country’s digital transformation ambitions.

The Ministry of Communications has announced plans to use private public partnerships (PPP) in coordination with the Kuwait Authority for Partnership Projects.

The PPP will take the form of a new entity licensed by the Communication and Information Technology Regulatory Authority (Citra) and managed by the government and the operator.

“The project is likely to gain interest from both infrastructure investors and operators,” analysts at BMI, formerly Fitch Solutions, said.

“The financing will provide funds required for fibre broadband expansion and support existing wireless infrastructure in Kuwait, driving improvements to retail clients and the business sector.”

Procuring through models such as PPP allows the state to transfer key risks to the private stakeholders, while still retaining ownership of the asset.

Kuwait issued Law No. 116 in 2014, which aimed to establish a PPP legal framework that was more investor-friendly.

However, the Gulf state has been slow to engage compared to most of its GCC neighbours, where governments are increasingly turning to PPPs as a way to share the financial burden on key infrastructure needs.

Business benefits

Under the latest Kuwait PPP plan, the Ministry of Communications will remain in charge of the fibre network infrastructure and provide services to internet service providers and telecoms operators.

BMI’s country risk team estimates that Kuwait hosts about 4.3 million people and more than 714,00 households in 2023.

It forecasts that fibre-optic connections are likely to grow to 149,000 by 2032, based on slow network expansion, to cover just 18.2 percent of households, with businesses likely to be the main beneficiaries of the project.

Kuwait is also connected to multiple international fibre-optic subsea cable infrastructures, including Falcon and 2Africa, providing ample low-cost bandwidth. However, BMI said overall capacity is much lower relative to neighbouring markets, which are served by a broader array of cables, many of which converge on Bahrain.

The government’s optical network rollout initially reached about 16 areas, and was followed by a second-stage expansion to cover 50 percent of Kuwaiti households in 2018.

Growing footprint

In a planned third-phase deployment, the ministry aimed to achieve a 100 percent fibre broadband footprint. However, momentum was lost because of the Covid-19 pandemic, and coverage reportedly remains far short of the market’s needs.

BMI’s analysts said: “An entry into the wireline market would enable mobile incumbent Zain or one of its rivals to offer fully converged telecoms services and to capture higher-value opportunities in the enterprise sector, where we expect there is strong latent demand for fibre connectivity.”

In March, the telecoms company Ooredoo Kuwait signed an agreement with the Chinese telecoms equipment supplier Huawei aimed at jointly upgrading Ooredoo’s Fibre+ high-speed internet service.

Ooredoo Kuwait’s CEO, Abdulaziz Al-Babtain, said the cooperation was part of plans “to empower Kuwait’s society by driving digital transformation”, aligning with Kuwait’s 2035 Vision.

In January Kuwait announced plans to bring a new Google Cloud region to the country.