MENA Mobile Communications: the most profitable in the world

According to the new Pyramid Research report, "Middle East & North Africa Mobile Benchmarks", profit margins for the region's mobile operators average nearly 60%, with some reaching upwards of 80%. STC, the Saudi incumbent, boasts an EBITDA margin and volume twice those of Orange UK. According to Pyramid Research analyst Jonas Lindblad "revenue and EBITDA volumes will grow substantially given that a large number of operations are still in their cradle, including mobile start-ups in populous countries like Iran and Saudi Arabia". By YE2008, Pyramid Research forecasts 100m mobile subscribers in the region, from the current 45m, with five mobile operators exceeding $1bn in revenue.

Several operators in the MENA region have leveraged their market exclusivity by minimizing costs through limited marketing and network maintenance. However, Lindblad argues that "over the long term, competition will push margins towards the global average as monopoly operators will have limited opportunity to keep their cost base at its currently low level". Lindblad points out that the greatest "cost savings are realized through integrated fixed/mobile operations" as almost all of MENA's top performers in terms of margins are integrated mobile/fixed incumbents.

The currently high margins imply huge room for further growth in terms of subscribers and revenue and in spite of the large number of licenses recently issued; there are more in the pipeline. "Several second and third license operators will rise to the top of the region's mobile rankings" concludes Lindblad.