Business | Telecoms
Middle East telecom firms will face competition from global players
Merger and acquisition deals in Middle East and Africa totalled $23b in the last two years.
- By Naushad K. Cherrayil, Senior-Sub-Editor
- Published: 00:31 April 6, 2008
Dubai: Newly established pan-regional telecom players will need to watch out for global players and competition from other emerging markets such as China, Russia and India, who are becoming more aggressive with their bids within the emerging markets in the Middle East and Africa (MEA), Delta Partners said.
"As telecom players in Middle East and Africa look to the future, there are several opportunities and challenges that they would need to address in order to stay ahead of competition, said Javier Alvarez, partner at Delta Partners, region's specialised telecom advisory and investment firm.
Monopolistic market
He said since 2000, the MEA region was one of the few remaining monopolistic telecom markets around the world, with commensurately low penetration rates for mobile and fixed line services.
Since then, the telecom market has seen phenomenal changes through market liberalisation, through the generation of astonishing revenues for the sector and dramatic increases in the adoption of mobile services. The wave of industry mergers and acquisitions completed among the region's top players in 2006 and 2007 had a total deal value of $23 billion.
Delta Partners believes that this year will see regional titans start dealing with the challenges of driving the cost synergies, while identifying ways of realising more revenue synergies.
"With stiff competition coming from European operators, Pan-regional players will be looking into stepping up on their game to compete with European player's strong operational and managerial experience, innovative research and development, globally recognisable brands," he said.
With the wave of consolidation that occurred in the MEA region among the top players, pan-regional titans have emerged, namely, etisalat, Zain, Qtel, Orascom Telecom, and MTN Group.
Only a couple of years back, Middle Eastern operators only needed to watch within the Gulf Cooperation Council (GCC) to identify real competition into the next bid. The situation has changed significantly in the last 12 months, with global players becoming more aggressive with their bids within the emerging markets.
"Only truly integrated operators will be the winners of this wave of integration in the telecom space of the MEA region," he concluded.
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