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Has the global recession slowed the apparently unstoppable growth of the Middle East's biggest operators? Following research focusing mainly on the GCC states, Jens Loosen and Oliver Platzen, Management Consultants with Detecon International, a leading consulting company for integrated management and technology consulting, are inclined to think it has. Penetration of mobile communications in wealthy, low population states like Kuwait, Bahrain, Qatar and the UAE is well above 100 per cent. However, these states, along with Saudi Arabia (itself over the 100 per cent level), are also home to some of the mobile operators that have made their names for operations beyond their own borders — companies like Zain (established in Kuwait), Etisalat (UAE), Qtel (Qatar), Batelco (Bahrain) and STC (Saudi Arabia). There are a number of reasons for this. WTO requirements have brought in competition, end user bases are small, and thus, as Loosen notes, “saturation is kicking in. This, taken together with the strong capital base they have, means they need to go overseas and explore new markets.” In fact, adds Platzen, “The biggest operators in this region all have a strategy to invest abroad”. In recent years this strategy has been very successful. Zain and Etisalat's declared aim is to be among the ten biggest operators in the world — an aim that still looks achievable. In particular moving into still developing markets like Iran, Nigeria, Egypt and Indonesia, where high population and growth opportunities help to mitigate the effects of a lower income user base, has proved successful. But Detecon’s research has noted that the worldwide economic downturn has started to affect this strategy. It is by no means fading out — the Iranian fourth mobile licence award attracted a number of big names — but it is certainly slowing, for two reasons, says Loosen. “Companies are looking after their cash resources, like everyone else,” he notes. “But also a lot of governments that want to have a licensing or tendering process for mobile or fixed licenses have simply withdrawn the tender process because they don't expect to receive the money they would like to have.” The other problem for many of these companies is that even their home markets are suffering. Referring to the slowdown in construction and other industries, Platzen explains: “A big portion of the customer base was foreign workers that were either calling or making calls home or using phones abroad.” Many of those workers, he points out, have had to leave. |
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