Telco operators focus shifts to data services

By Triska Hamid, MEED Business Reporter

"The market is beginning to mature, so there is slower subscription growth," says Matthew Reed, senior analyst and head of Middle East and Africa mobile research at UK-based research company Informa Telecoms & Media. "Operators have shifted to a new stage where they are competing harder for customers, whether to win them or retain them."

The growth potential for GCC operators no longer lies in voice subscribers, but in developing data and non-voice services, demand for which has been rising due to the proliferation of smartphone devices and tablets. Operators have responded to this trend by investing in upgrading their networks to LTE.

"Operators are moving deeply into data and the related area of content, this is a profound change," says Reed. "Operators are questioning how they should deal with these new opportunities."

The opportunities in data are turning into a challenge for the region's operators, as they are now competing alongside traditional media players and new digital players. Some fear that telecoms companies will become a dumb pipe, being simply the medium to transfer content and data produced by social media websites such as Youtube and Facebook. But others are becoming more actively involved in this new arena.

UAE telecoms operator Du has launched its own digital media platform called Anayou that brings together social media, videos and music and can be accessed on smart devices and televisions.
"It will become an even more acute dilemma for operators as to what role they should play in this changing environment," says Reed.

Acquisitions suffer from uncertain environment

The biggest acquisition planned for the year, the UAE's takeover of Kuwait's Zain Group, fell apart in March. The joint-bid from Bahrain's Batelco and Saudi Arabia's Kingdom Holding for Zain's Saudi Arabia unit also collapsed in September due to financing problems. The one success story of 2011 was Egypt's Orascom Telecom Holding's merger with Russia's Vimpelcom in April to become the world's sixth largest telecoms operator. The company is still in talks with the Algerian government over the sale of its Algerian unit Djezzy.

Eventually, regional operators will be competing with one another on data. Voice has become a commodity and the real innovation lies in providing content and data at attractive prices. The strategy that operators will adopt will vary, but most will be willing to partner with other players.

This extract was taken from MEED's Yearbook 2012, to read the full article please visit Meed.com