Gulf mobile giants looking to expand

Mideast telecom giants eye EU, Asia

Following the wave of consolidation in the Middle East and Africa (MEA) region last year, pan-regional telecoms titans will continue to acquire small stakes in larger players in other adjacent regions such as southern and eastern Europe and southeast and central Asia this year, according to a new report by Dubai-based telecoms advisory and investment firm Delta Partners.

With stiff competition coming from European operators, pan-regional players will be looking to step up on their game to compete with European players’ strong operational and managerial experience, innovative R&D and globally recognisable brands, according to the report on challenges and opportunities for telecoms operators released on Monday.

The wave of industry mergers and acquisitions completed among the region’s top players in 2006 and last year will require regional titans to prove the value that their acquiring company is bringing to the acquisition target, it said.

According to Delta Partners, 17 of the largest regional M&A deals in the mobile sector in the MEA region had a total deal value of $23 billion (Dh84.47bn). “This year will see these regional titans start dealing with the challenges of driving the cost synergies, while identifying ways of realising more revenue synergies. As regional players do so, it will be crucial for them to focus their efforts on synergies,” it said.

The report said the next wave of outsourcing opportunities will be around the up-stream part of the value chain. “As network operators continue to realise the need to focus on their core functions, while ensuring desired service levels at competitive prices and business profitability, outsourcing several areas of the business to third party vendors will become critical this year.”

The report said emerging outsourcing opportunities that the industry needs to watch out for this year include network operations outsourcing and managed services, including tower management, and outsourcing transmission to wholesale operators. As markets mature and new network operators enter the industry, existing operators will need to shift away from acquisition (market share) towards customer retention (value share) in order to protect their customer base from being stolen by new challengers, said the report.

“In order to do so, it will be vital for such incumbent operators to implement successful customer management programmes by re-enforcing their newly created customer-centric organisation structure, investing time and effort in improving customer analytics, and launching a series of segmented and targeted customer retention and development initiatives focused on their high-value customers, including the delivery of a consistent brand experience,” the report said.