Following the auction for the third Saudi Arabian mobile operator licence, regional operators will have to look outside the Gulf for major growth opportunities, says Analysys, the global advisers on telecoms, IT and media.
Middle Eastern operators will be forced to consider entering markets further afield as many Gulf markets reach saturation, with investments on the African continent, as well as limited opportunities elsewhere in the Middle East looking like most likely expansion targets.
According to Research Analyst Daniel Jones, most of the major investment opportunities for regional operators that are looking to expand are likely to be on the African continent rather than in the Middle East, though some will remain. "African markets are seen as a key source of growth; they have low penetration levels and much larger populations than many Middle Eastern countries. Etisalat's purchase of the third Egyptian mobile license for USD2.9 billion exemplifies Middle Eastern operators' eagerness to expand into these markets, and demonstrates their expectations for growth."
Jones highlights Algeria and Lebanon as targets for the next major investments by Middle East telecoms operators: the Algerian government is reportedly planning a sell a 35% stake in Algérie Télécom in 2007, and the privatisation of Lebanon's two mobile operators is also expected later this year.
"Such fresh opportunities are becoming rare, and operators may have to consolidate to expand geographical coverage," says Jones.
"Etisalat and MTC have acquired stakes in African operators (Atlantique Telecom and Celtel respectively) to dramatically increase the number of countries that they operate in, but STC has yet to make an aggressive push for external growth."
However the Saudi incumbent has been cautious when considering investment opportunities; it participated unsuccessfully in the auction for the third Egyptian mobile licence and withdrew from the race to acquire a stake in Tunisie Telecom because it decided that domestic investment would provide a better return. Having said that, external growth was a key element of STC's recent 'FORWARD' strategy, which outlined its goals for the next three to four years, so while the region focuses on competing with STC in Saudi Arabia, STC may be focusing its attention elsewhere.
Analysys Research's market intelligence services for telecoms markets in the Middle East include: country reports for Bahrain, Egypt, Israel, Jordan, Kuwait, Oman, Turkey and UAE; in-depth company profiles of more than 20 operators in the region; and listings for more than 70 other technology companies in the region.
Forthcoming publications include The Middle Eastern Mobile Market: trends and forecasts 2007-12 and an operator case study that describes the OSS challenges faced by a new entrant in the Gulf region.
