Telecom investment to decline in KSA and UAE

Asian operators set to lead capex growth as Middle East operators rein in spending

Tags: 3GBroadbandFrost and Sullivan Middle EastInvestmentSaudi ArabiaUnited Arab Emirates
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Telecom investment to decline in KSA and UAE Asian operators set to lead capex growth as Middle East operators rein in spending. (Shutterstock)
By  Roger Field Published  August 3, 2009

Investment in the telecoms sector is set to decline in the UAE and KSA in the next few years, as operators rein in spending, according to a report from research organisation Frost & Sullivan.

In Saudi Arabia, total telecom spending is expected to decline at a rate of around 1.59% a year – amounting to a drop of about $701 million a year – from $6.576 billion in 2008 to $5.875 billion in 2015.

The report added that spending on broadband in KSA will constitute “a major portion” of capex of the operators in the next three to four years owing to low overall penetration rates.

Telecom spending in the UAE appears to be more resilient according to the report, and is expected to decline by just 0.02% between 2008 and 2015, from $1.264 billion in 2008, to $1.262 billion in 2015, amounting to fall of just $1.9 million a year.

Meanwhile, operators in Asia look set to increase total spending in the same period. The report highlighted the telecom sectors in India and Bangladesh as being particularly strong, with capex from operators in both countries expected to keep rising until 2015.

Total telecom spending in the Indian market is expected to grow by more than $3.5 billion a year between 2008 and 2015, up from $21.5 billion in 2008 to $25.1 billion in 2015, a rise of about 2.2% a year.

Frost & Sullivan attributes this projected growth to be driven by new 3G deployments in the next two years, and a focus on broadband services by larger operators.

Spending among telcos in Bangladesh is set to grow at an even faster rate, largely owing to pent up demand in a market that has been stunted by taxation problems, including a tax on sim cards.

Frost & Sullivan estimates that the total telecom spending in Bangladesh is expected to grow at a compound annual rate of about 2.4%, from $ 1.7 billion in 2008 to $2 billion in 2015.

Telecom spending in the Sri Lankan market is expected to grow at a more modest rate of 0.08% a year from $589.4 million in 2008 to $592.68 million in 2015.

Girish Trivedi, deputy director, South Asia and Middle East, Frost & Sullivan, said: “While fixed line services will have lesser investment, mobile services are anticipated to constitute major capex in the South Asia and Middle East region.

“Technological advancements like 3G will continue to spur the spending pattern. Investments in broadband and carrier networks and multimedia and value-added services will gain significant traction in these regions.”

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