Past acquisitions by the region’s largest telecoms firms show that international expansion is not always as straightforward as it seems.

As the UAE’s Etisalat, Qatar’s Ooredoo, Saudi Telecom Company (STC) and Kuwait’s Zain face increased competition in home markets, they have realised that getting their foreign expansion strategies right is crucial to achieve further growth. While acquisitions in the GCC have generally gone well, the formula cannot simply be transplanted to markets outside the region, such as India, Pakistan and Africa.

“Etisalat’s offer of $5.5bn for 53 per cent of Maroc Telecom shows it is no longer willing to overpay for acquisitions”

Previous tactics of indiscriminately buying just to gain a presence in new markets have often led to losses or required more investments than originally anticipated. In the past, it was not uncommon for an operator to overpay for an acquisition, realise it had not taken regulatory challenges into account, underestimate capital expenditures required to build greenfield operations, or have to compete with already established players in saturated markets.

Ooredoo, which receives the majority of its revenues from operations abroad, is the exception to this trend. Its disciplined approach has meant it has timed acquisitions so it would not be overpaying, and it has targeted established players in markets with room for growth.

The other operators are now in the process of forming more comprehensive strategies, seemingly having learnt the lessons of the past. Both Etisalat and STC underwent complete management revamps in the past two years, while Zain is trying to enter new market niches after a proposed merger with Etisalat fell through in 2011.

Operators have already started examining future deals more carefully, while divesting in non-core markets or places with heavy competition. In the meantime, Etisalat’s offer of E4.2bn ($5.5bn) for 53 per cent of Morocco’s Maroc Telecom shows it is no longer willing to overpay for acquisitions.