2007 set to be the year for further consolidation

The start of a new year has not diminished the ambitions of the region's mobile operators. Speculation early this year is that Kuwait's second mobile operator Wataniya Telecom may prove to be the first step in the direction of a wider, industry-wide consolidation as larger regional players look to swallow smaller ones in order to fuel their appetite for expansion.

Analysts have suggested that Wataniya's relatively small market capitalisation, significant free float of 52%, and presence in large and underpenetrated markets such as Algeria, Iraq and Tunisia make it an ideal takeover target. There is likely to be no shortage of interested parties. The region's most acquisitive mobile operator of recent years, MTC Group has revamped its 3x3x3 expansion strategy into a new growth strategy - ACE (acceleration, consolidation, expansion).

ACE will be the group's driving force to position it to take on the challenges of globalisation. Through implementation of ACE, MTC's new goals by the year 2011 are to become a company with a market capitalisation of US$30 billion, exceeding 70 million customers and to attain a US$6 billion EBITDA.

By comparison, in the nine months to end-September 2006 MTC recorded consolidated revenues of US$2.92 billion and consolidated EBITDA of US$1.43 billion, representing a margin of 49%.

Qatar's incumbent operator Qtel has marked 2007 as a year with significant promise from the perspective of expansion outside of its domestic market. The telco announced the US$635 million acquisition of a 25% stake in Singapore Technologies Telemedia, which in turn holds stakes in Singapore operator StarHub as well as Indonesia's Indosat. During the course of the year Qtel CEO Nasser Marafih will be concerning himself with his driving ambition to see the operator emerge as one the largest 20 telecoms companies in the world by 2020. "We have been looking at opportunities - both new licences as well as existing companies in the region, and we are currently evaluating a number of investments," Marafih told CommsMEA recently. "We are most interested in opportunities in the Middle East and North Africa region, as well as parts of Asia."

Marafih emphasises that the creation of shareholder wealth is of paramount importance to Qtel, and that this is one of the main reasons it chose not to bid even more aggressively than it did do in the Egyptian licensing process.

Egypt's Orascom Telecom is another operator to keep an eye on, having announced it will continue to evaluate a number of investment opportunities, including acquisitions of new licences and established operators, as well as repurchases of minority stakes in existing Orascom Telecom operations.

Orascom Telecom operates GSM networks in seven high growth markets in the Middle East, Africa and South Asia, having a total population under licence of approximately 460 million with an average mobile telephony penetration of approximately 22% as at end-September, 2006.

Orascom operates GSM networks in Algeria (OTA), Pakistan (Mobilink), Egypt (Mobinil), Tunisia (Tunisiana), Iraq (Iraqna), Bangladesh (Banglalink), and Zimbabwe (Telecel Zimbabwe). The operator had over 50 million subscribers as at December 2006, and owns 19.3% of Hutchison Telecoms International Limited.