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Further consolidation predicted for telco sector

M&A activity set to continue in region's telco sector, says Etisalat COO

Ahmed Julfar predicts further consolidation in the region's telecoms sector.
Ahmed Julfar predicts further consolidation in the region's telecoms sector.

Consolidation in the Middle East and African telecoms sector looks set to continue, and the region should expect to see another "mega deal" aside from Eisalat's bid for Zain, according to Ahmad Julfar, group chief operating officer, Etisalat.

"The trend is still there, although there is more focus to grow in Middle East markets, whether it is by us, Qtel, or Orascom, there is a case for more acquisitions, and I think there will be some kind of mega deal that will change the landscape of telecoms in the region," Julfar told CommsMEA.

"There is also the opportunity in Syria where we are bidding for the third mobile licence," he said, adding that other Gulf operators also appeared to be interested in the licence.

Julfar said that beyond the Etisalat-Zain and Orascom-VimpelCom deals that are being discussed, other players are also assessing opportunities for non-organic growth in the region.

"There are some companies interested in Zain Saudi if our transaction goes through. MTN keep coming back and forth because they think they have a lot of potential for growth.

"You can also see some international players coming in, especially after Bharti acquired the African operations from Zain, so the French are getting more interested in Africa, and other big players could have more interest to come into the region."

Furthermore, as growth in the region's telecoms sector tails off, competition is likely to continue to drive consolidation, Julfar said.

He pointed to the merger between T-Mobile and Orange in the UK in September 2010, and added that a similar type of "in-country" deal cold happen in the Middle East.

After the onset of the financial crisis in 2008, M&A activity in the region's telecoms sector paused, but Bharti Airtel's acquisition of Zain's African assets in June 2009 put consolidation back in the spotlight.