The telecoms sector continues to be well represented in the MEED 100, with 15 companies in the listing. Once again four telecoms companies feature among the Middle East’s 10 largest listed companies by market capitalisation.

Telecoms
Rank 2010 Rank 2009 Company Exchange Market Cap ($m) Share price ($)
3 2 Saudi Telecom Company Tadawul 23,520 11.75
4 4 Etisalat  Abu Dhabi 23,188 3.23
6 8 Zain Group  Kuwait 17,121 4.44
8 5 Maroc Telecom  Casablanca 15,817 17.78
20 19 etihad etisalat company (Mobily) Tadawul 8,587 12.27
21 15 Telecommunication Company of Iran Tehran 8,571 0.19
28 37 Qatar Telecom (QTel)  Doha 6,253 42.57
31 28 Telecom Egypt Company Egypt 6,054 3.54
32 51 Orascom Telecom Holdings  Egypt 5,885 1.12
47 63 Egyptian Company for Mobile Services Egypt 3,901 38.91
=51 31 Saudi Mobile Telecommunications Company (Zain Saudi Arabia)  Tadawul 3,677 2.63
61 75 Emirates Integrated Telecommunications Company (Du) Dubai (DFM) 3,093 0.77
66 59 National Mobile Telecommunications Company (Wataniya Kuwait 2,887 5.75
76 45 Oman Telecommunications Company Oman 2,564 3.43
81 65 Bahrain Telecommunications Company (Batelco Bahrain 2,234 1.56
Sources: Thomson Reuters; Tehran Stock Exchange

Outside the top 10, Egypt’s Orascom Telecom gained the most ground in the past 12 months, leaping 19 places to 32. It has been engaged in a court battle between France Telecom for ownership of Egypt’s largest mobile operator – Egyptian Company for Mobile Services (Mobinil). That firm also climbed strongly from 63 to 47, bouyed perhaps by the prospect of ownership change.

The sector has endured a tough year, with domestic investment slowing down, while the global recession erodes profits from international operations. Even before the downturn, markets in the Middle East were close to saturation, with second and third licences already awarded. Those companies that could afford it were forced to hunt further afield.

STC retains its domination of the sector within the region, despite dropping one place to number 3 amid tough market conditions last year. The group reported net profits of SR10.8bn, a slight decline on 2008, but boosted by a $182m capital gain from the flotation of Malaysian subsidiary Maxis.

STC has unveiled Viva, the third mobile operator in Bahrain, in which the company has a 26 per cent stake. The group is targeting a 17 per cent share of the Bahraini market by the end of this year.

The UAE’s Etisalat continues to rival STC closely for top spot in the sector. The group’s international expansion is set to continue this year with the company signalling plans to purchase assets in at least two African countries, and to bid for a mobile licence in Syria. A report by US investment bank JP Morgan estimated the company has an some $16.4bn available for mergers and acquisitions.

Talks to buy the Iraqi operator Korek Telecom are reported to be at an advanced stage and should be completed early this year, giving Etisalat full coverage of Iraq’s northern Kurdish region. The company has also indicated it will bid for the fourth Iraqi licence when tendering begins.

Drop in profit

Etisalat is also in the final round of negotiations for a licence in Libya. Net profit for the nine months to 30 September 2009 was AED6.8bn ($1.8bn), a fall of 5.6 per cent year-on-year.

A merger agreement signed between Palestine Telecommunications Company and Kuwait’s telecoms giant Zain in May 2009 was abandoned in November when the Kuwaiti group failed to receive government approval for the deal. However, the two sides have expressed hope that the agreement can be resurrected this year.

Reports in January that Zain’s Saudi subsidiary is in talks with creditors after missing commitments on a two-year $2.5bn loan, are a reminder of the tight market conditions in which companies are still operating in the region.

Few companies will be working under conditions as restrictive as those imposed on Telecommunication Company of Iran this year. A new entry in last year’s classification, the group falls six places to 21 in 2010 and a tough year could be in prospect despite September’s $8bn privatisation. Analysts say the firm has suffered from a decrease in demand for fixed line services in the face of increased mobile use.

Believed to be majority-owned by the Revolutionary Guard, Iran’s largest telecoms provider is understood to be on a list of companies drawn up by Washington to be targeted under new financial sanctions.