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TELECOM AND ITZain started trading in 2008 and had the highest daily trading volumes (Exhibit 101).Exhibit 101: Avg. daily trading volume of stocks (‘000s) , Jan 2007 – Dec 200814,00012,00012,06010,0008,0006,0004,0002,0001,6131,0400STC Mobily ZainSource: ReutersInternet and broadbandservices, as well as value addedservices are the relativelyunexplored and key growthareas for the sectorThe telecommunication sector in KSA is emerging as one of the most competitive markets in theregion. With the liberalization of the sector and entry of more players, competition is likely tofurther intensify, depressing the already falling ARPUs. Competition also would increasemarketing costs and promotion expenses. However, strong demand for mobile, reduction inhandset prices and tariffs, and increasing popularity of value-added services offered onmobile platforms, present a significant growth opportunity. We expect growth in customer baseand average minutes of use to offset the effect on revenue of a fall in ARPU. Moreover, theuptake of Internet and broadband services is expected to increase due to a growing youngpopulation, and willingness to adopt new technologies. Although demand for wired Internet islikely to promote fixed-line connectivity we believe companies would focus more on wirelessconnectivity, especially through mobiles, given their high penetration. Furthermore, investmentsin the sector are likely to increase with the opening up of the sector and the entry of newplayers. Therefore, our outlook on growth in KSA’s telecommunication sector is positive.JUNE 2009SAUDI ARABIA FACTBOOK68