Home / Local telecom service providers spurn global slowdown

Local telecom service providers spurn global slowdown

IDC predicts the region's data communications services market will grow from US$743.6 million to US$1.4 billion by 2006.

Regardless of the economic slowdown that has been wrought havoc on the world’s telecom market, the region’s service providers have continued to show strong growth. IDC statistics indicate that the Middle East & North Africa (MENA) data communications market experiencing increased demand and investment during 2001.

The analyst house also predicts that the region's data communications services market, which includes managed data network services (MDNS) and leased lines, will grow from a current US$743.6 million to US$1.4 billion by 2006.

"Bucking Western Europe's slowdown in infrastructure expenditure over the past two years, the [MENA] region has seen dramatic increases in investments by incumbents, as well as the few new entrants in the data communications services market," says Mohsen Malaki, Senior Analyst at IDC CEMA's Telecommunications Group.

The bulk of data communications investment has been made in national backbones, which have facilitated the provision of managed data network services. The top service providers in the region are reaping the rewards of heavy investment in backbones that can facilitate the provision of MDNS. The laggards on the other hand, are only just marketing digital leased lines to their analog customers.

According to IDC, the investment by service providers is justified by the tremendous demand for the newly introduced managed data network services in the more advanced markets of the region, and for digital leased lines in the less developed markets.

"Unlike the more advanced markets of Western Europe, where MDNS growth is fueled primarily by uptake in IP VPN, frame/cell services will be the engine of growth for MDNS in Middle East and North Africa," comments Malaki.

IDC predicts a slow uptake of IP VPN services, with a minimal impact on MDNS revenue in the region until 2005.

The gradual decline in leased line revenue witnessed in much of Western Europe is not yet on the horizon in the Middle East & North Africa. In fact, leased lines will continue to grow over the forecast period, although at a much slower pace than MDNS. This will be due primarily to the limited rollout of MDNS in many of the region's countries, which leaves leased lines as the most viable option for businesses. This is compounded by the late introduction of high bandwidth leased lines in several of the countries, which are currently witnessing a boom in digital leased line connections.

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