Dubai: Telecommunications companies looking to persuade Google and Facebook to share billions of dollars in advertising revenues are fighting a losing battle, experts said yesterday.

Speaking during a panel discussion yesterday at the Smart Handheld Summit 2011 in Dubai, delegates pointed out that telcos including du and etisalat are already reaping the benefits of growing smartphone data package subscriptions and should focus on doing what they do best, providing primary access to an Internet with an estimated 60 million users across the Middle East.

Dr Paul Doany, chairman of Timar Ventures and former CEO of Oger Telecom, said that rather than exploring new revenue streams, telecom operators must tighten operating efficiency. This would also enable them to offset high costs of upgrading to fourth generation (4G) broadband.

"Telecom operators have only one option going forward, it's to improve their operational efficiency," said Doany. "They have to be more like fixed operators."

Doany said he did not think that telecom companies should stray into commercial operations such as new platforms and mobile apps to gain new revenues as voice revenues decline. A telecom operator who strays from core access services will not attract investment.

"I won't invest in that company," Doany, a venture capitalist said. "It's about using your strength. If you [telecom operators] try and play in someone else's space... you lose your strength." He noted that five European telecom operators attempted to take on Google to help defray the cost of upgrading and maintaining networks.

"I don't think anyone in the world, let alone a tele-com operator, can do anything to counter Google."

But Osman Sultan, CEO of du telecom in UAE, said the idea behind partnering with internet giants is not about trying to compete, it's about moving in the same direction to equally derive revenues from the industry. "The purpose is not to counter Google or Facebook," Sultan said, noting the aim is to "have a claim in the advertising-based revenue stream. We need to be able to claim some of it. I am in the business of making money."

Sultan suggested that telecom operators in the region need to work together to drill into third-party advertising revenues.

"I strongly believe telecom operators need to come together, we can do it at the level of the Arab world. For the Arab world, there is a need for aggregation," he said.

Unique advantages

Matthew Willsher, chief marketing officer of etisalat, added that the size and breadth of a telecom operator gives it unique advantages as a sizable machine that commands a lot of clout.

"I think we're sitting on an incredible asset in terms of that machine," Willsher said.

Dr Bassam Hannoun, CEO of Wataniya Mobile, said the financial theory that leaner operations will drive the telecoms industry forward needs other sound business principles factored in.

"It's also management and protection of revenue," Hannoun said, adding that telecom operators must "keep, protect and grow revenue."

The last man standing will be the telecom operator that "takes the fragmented value chain" and weaves into a workable solution, Hannoun said.

Dr Abdul Malek Al Jaber, founder and chairman of Mena Apps, said that tele-com operators will have a hard time matching the sheer growth by Internet giants such as Facebook which has grown 60 per cent in the Middle East this year from 21 million to 34 million users. "I don't think any operator saw any similar growth," Al Jaber said. "It's a tsunami, you can't stop it."