Expanding horizons

While Western companies are eyeing the Middle East's telco sector, local players are also looking to expand their horizons beyond the MENA region

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By  Roger Field Published  December 12, 2007

After delaying the announcement for more than a month, ICT finally revealed the winning bid for Qatar's second mobile license earlier this week. While many Middle East based analysts had been expecting a local player to gain the bid, with Etisalat and Zain both tipped as favourites to gain the license, it was eventually a consortium led by UK-based Vodafone Group that gained entry to the region's last telecom monopoly.

While the price of Vodafone's bid has been kept under wraps, reports suggest the figure was less than GBP300 million ($614 million), although Vodafone has also declined to reveal the size of its stake in the consortium.

Leaving the cost of the licence aside, Qatar appears to have plenty of potential for a mobile operator with the right experience. The country has a fast growing population of some 840,000 people, which is expected to increase to more than 1.3 million by 2015. Qatar also has one of the highest ARPUs for mobile phone use in the world.

A less savoury statistic for a new entrant into Qatar's mobile sector is that the country also has more mobile phones than people, which could make it difficult for a new player to squeeze much business from the existing population. The consortium led by Vodafone could be forced to rely on strong call rates and on gaining business from expatriates yet to enter the country.

But while people are used to seeing Western companies such as Vodafone Group expand their presence in the Middle East, they are less familiar with seeing local companies expand in Europe and the US - and yet this is becoming a more common phenomenon in the telecom sector.

Indeed, Kuwaiti telco Zain recently signaled its intention to move into the European telco market, with some local press reports indicating this could be as soon as next year. Zain's CEO, Saad Al Barrak, said the company might sell shares in order to finance expansion, which would likely be staged through acquisitions.

Another local telco that has been in the spotlight during the past week is Egypt's Orascom Telecom, with reports in the UK press suggesting the company was up for sale. Orascom's CEO, Naguib Sawiris, was quick to deny the story.

Rumours of the sale seem to have appeared partly because Orascom has been considering selling certain parts of its business. Sawiris said recently that he might sell a minority stake in Weather Investments SpA, a telecoms holding company he runs. It is also thought that Orascom could be looking to dispose of some non-core assets in a bid to raise cash for expansion in Asia - quite the reverse of the rumours emanating from the UK. And if there is any truth in reports that Orascom was in talks with various European companies, perhaps assets in the West are also on the company's wish list.

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