Telecoms need to diversify in the Middle East

The days of super-deals are over in the Middle East. Today contracts are more likely to run in the tens of millions rather than hundreds. Since 2002, only five deals have topped the $100 million-plus mark among telecoms-related deals worth $1,250 million.

by Middle East Economic Digest, Vol 50 No 6
Last Updated: 23 Jul 2013

The telecoms market is diverse and relatively mature - countries like Bahrain and the UAE display high penetration rates, if not saturation, and few places still require major capacity. Saudi Arabia, Iran and Yemen are probably the last real opportunities for major network infrastructure work.

Instead, growth in the telecoms market will have to be quality driven, as network operators seek to differentiate themselves by the services and features they offer. 3G technology is likely to provide good avenues for network upgrades, while generic growth from 2G is likely to be the biggest earner for operators in the region.

Telecom companies in the region will probably opt for different strategies. For example, Nokia has chosen to focus on improving its service and developing its presence in the region, while Alcatel is pursuing a diversification policy with vertical activities in oil and gas and rail and airport network.

Alacatel's recent $250 million contract with Mitsubishi Heavy Industries (MHIs) to provide train and telecommunications systems for the Dubai Metro system is a fine example of the company's drive. Huawei, a Chinese operator, will focus on ultra-broadband services.

Whichever strategy operators opt for, there is still ample scope for growth with many areas still to be exploited to their full potential and new avenues to explore. The year 2006 promises to be crucial for telecoms in the Middle East.

Source: Goodbye to the super-deal
Middle East Economic Digest, Vol 50 No 6

Review by Emilie Filou

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