Telecom: supporting a move to higher connectivity Hootan Yazhari, CFA >> Merrill Lynch (DIFC) [email protected] Table 15: Key NTP objectives for the Ministry of Communications and Information Technology No. Strategic objective Key Performance Indicator (KPI) Unit Baseline tonpet aber wee Provide critical resources, especially frequency Percentage of frequency spectrum available for 1 spectrum for Information telecommunications — telecommunication services out of the total allocated % 42 80 NA >90 and Technology services telecommunication services Provide broadband services to all KSA regions Pe'centage of FTTH coverage in densely % 44 80 >95 >90 by stimulating investment in infrastructure and peeulied urboneroes 5 2 . . Percentage of FTTH coverage in urban areas % 12 59 >90 >80 developing tools, technical and regulatory ; ; faniawaiks Percentage of wireless broadband networks’ coverage (more % 42 70 NA 74 than 10 Mbps) in remote areas Maturity level of the government services transformation to % 44 85 NA NA 3 Develop and activate smart government e-services — transactions based on a common infrastructure SA's rank in the United Nations index for the development % 36 25 18 rr of e-government 4 Bridge the digital gap in the skills of ICT users | Percentage of internet users in KSA % 63.7 85 90.4 87.9 Source: National Transformation Plan NTP helps increase penetration of higher margin offerings We believe the National Transformation Plan will herald significant change for the Saudi telecom sector over the next five years. In particular, its focus on increasing access to high speed internet (via wireless and fibre) should underpin a material uplift in data usage and broadband penetration levels. Given these offerings represent the highest margin services provided by the telecom service providers, we believe the move towards a more data intensive society should be supportive for industry margins. Furthermore, with the NTP’s plans relying heavily on private sector i