Telecoms Special Report: Sector poised for fresh investment

30 August 2011

GCC telecoms operators lead drive towards broadband technology expansion, but timing is a key issue

In their relentless pursuit of growth, the region’s leading telecoms companies are poised to enter a period of investment that will transform the sector for investors and consumers alike.

The most pressing issue is the need to upgrade their current networks to support the expansion of mobile high-speed broadband data services such as internet access, video streaming and gaming.

The enormous demand for these services from the region’s young population has made the upgrade to long-term evolution (LTE) technology a necessity. But it will be expensive. And as a result, it is the wealthy GCC operators that are leading the way. There are also signs that, after three years in the doldrums, the Gulf telecom firms are poised to launch a new period of mergers and acquisitions activity as they seek expansion opportunities in strong growth markets.

There is also opportunity for consolidation. The region’s telecoms sector is crowded and fragmented and the major players earn less than their counterparts in other industries.

With high penetration rates of mobile phone across the region, the acquisition of existing players and the merging of different operations offer the best routes to expansion.

The only issue is timing. The uncertainty created by the Arab Spring, with operators in the most-affected markets suffering losses, has left shareholders preferring to wait and see what the outcome of the uprisings will be.

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