Abu Dhabi: Mergers and acquisitions activity in tele-communications in the Middle East and North Africa region will likely continue during 2011, according to business research and consultancy firm Frost & Sullivan.
"The source of this activity is expected from three types of players: regional operators seeking to gain a greater geographic footprint in the region; operators concentrated in adjacent markets [such as Europe and Africa] looking to invest in emerging markets, and investments on the part of holding companies looking for a solid return on investment," Frost & Sullivan said in its Yearly Sectoral Analysis for the MENA telecommunications market.
Content generation is likely to be another area of increased activity in 2011 on all sorts of media platforms with the development of mobile and web applications is likely to be the greatest area of focus, it added.
However, Frost & Sullivan said the historic growth levels of the Mena mobile market are unlikely to continue as most countries in the region are nearing maturity.
"[However], the region's fixed line market is expected to show high levels of growth as operators make increased investments in fibre and FTTH [Fibre to the home]. The introduction of the latest submarine cable to connect the region to India and Europe has brought increased bandwidth and new opportunity for telecommunications services to the region, it added.
"With economic growth seemingly back on track, 2011 should be a year in which organisations involved in the Mena tele-communications sector can build on the foundations for growth established during 2010," said Frost & Sullivan.
Significant year
It said 2010 will be remembered as one of significant merger and acquisition activities in the Mena tele-communications market. The most notable of these was the acquisition of most of Zain's African assets by India's Bharti Airtel.
"In one move, the African continent has been introduced to a new operator that is likely to provide new impetus for competition in this dynamic market. Zain has also been the target of increased acquisition interest from etisalat and it is expected that if all conditions are met, this deal should go through by January 2011," it added.
Frost & Sullivan said the rising prominence of Middle East operators such as etisalat, Qatar Telecom (Qtel) and Batelco has propelled these players onto the global stage and there is now greater potential for their expansion into other markets.
"There is also potential for greater inflows of foreign telecommunications investment into the region with European and Pan African operators expected to show greater interest in the Mena region. The region represents a strategically and geographically accessible opportunity for these operators to grow, either through acquisitions, or in limited cases, through the issuance of new licences," it added.
Commenting on the scope of M&A activities in the Mena region next year, Said Irfan, Research Manager, Telecommunications for IDC Middle East, Turkey and Africa said: "The M&A activity with regard to telecommunications in the Mena region will likely continue on the back of pressure for the operators to look for new growth opportunities outside of their home countries."
