Complex Made Simple

GCC telecom providers’s revenue models, digital readiness, slow to change

The story of the telecommunications sector is similar to that of the media sector.

The growth and the revenue models that companies have followed for years are turned upside down owing to new technologies.

Highlighting the role that governments should play, Saudi Telecom Company’s Group CEO Dr Khaled Biyari says: “(As) the whole region is moving towards digital transformation through elements of the Fourth Industrial Revolution, here comes the importance of governments in the region to provide the right environment and stimulate investment in digital infrastructure required.”

“STC embraced the Kingdom Vision 2030 and the national transformation program 2020 through multiple initiatives, which include deployment of broadband throughout the Kingdom. The company recently signed with the Ministry of Communications and Information Technology, represented by the Communications and Information Technology Commission, an agreement to provide high speed broadband with fiber-optic technology, with a projected cost of up to $2 billion, designed to deliver broadband to more than two million homes across government plans, under the supervision of the Ministry of Communications and Information Technology.”

“Also, STC will continue to invest in promising technologies and digital sectors, particularly in areas that enable the company to benefit from their assets and infrastructure and help enable growth and expansion of investments in different areas, and the latest company announcement establishing a $500 million venture capital fund (STV) to strengthen this trend,” explains Dr Biyari.

Read: Saudi lifts ban on VoIP but the UAE restricts it? Does this make sense?

Financial performance

When it comes to financial performance, the UAE firm etisalat has said its Q2 2017 net profit was $536 million, which stood at $569 million in Q1 2017 and was $630 million in Q2 2016.

Another UAE telecom company du reported that its six-month net income until July 30, 2016 was $243.1 million, while for the same period in 2017 the net income was $221 million – down by nine per cent.

Vice chairman at Deloitte and US Telecom leader Craig Wigginton has a few suggestions for the telecom companies to keep their revenue streams flowing smoothly.

Wigginton sees the growth in smartphone usage as a continuing opportunity for all telecom sub-sectors, including wireless and wireline/broadband carriers, network equipment/infrastructure companies, and device manufacturers.

Read: Unemployed Saudis face a harsher reality with VAT, fuel increases

He identifies two potential areas of focus – content and the Internet of Things (IoT).

“The long-standing promise of delivering content to any screen is finally becoming a reality, enabled by advances in network technology and higher speeds, as well as enhanced content at the carrier level, whether owned or resold,” he says in the Telecom Outlook Report of 2017.

He continues: “Consumer demand for digital technologies that make it easier to control their homes and cars has grown and will help to drive incremental revenue in the ecosystem.”

“Carriers should continue to focus on providing data and voice services that are high-quality, reliable and affordable. will be moving away from proprietary, hardware-based network equipment to software-based network functions, with technologies such as software defined networking and network function virtualization,” says Wigginton, adding that this shift should allow them to manage their networks more efficiently and effectively, and be more responsive to changes in consumer preferences.