Fear and roaming in the Gulf

The Gulf’s telecommunications giants are once more pushing ahead with ambitious expansion plans into some of the world’s frontier markets, but not everything is going as smoothly as they would like

Second to oil, mobile phone operators in recent years have been one of the Gulf region’s biggest exports.

The UAE’s Emirates Telecommunications Corporation, better known as Etisalat, is one of the world’s largest mobile networks, with an estimated 135 million subscribers or so across 18 countries from Indonesia to Egypt.  It is now looking to expand its footprint in North Africa.

Similarly, Kuwait’s Zain Group is also a giant of the regional industry with a presence in eight territories around the Middle East and North Africa, and plans to grow further. Likewise, Qatar’s Ooredoo, formerly known as Qtel, is making strides in some of the world’s least developed telephony markets, such as Myanmar.

If any of this sounds familiar, that’s because it is.

The 2000s were characterised by many of these operators investing billions of dollars in some of the world’s most exotic markets, before being forced to withdraw for a number of reasons.

In 2008, for example, Etisalat was unexpectedly made to cancel plans for expansion into Iran after being led to believe it had won the rights to buy a €300m ($411.9m) licence. It turned out it had not, with Tehran quickly cancelling the agreement without making public any reason.

The company will also be eager to forget its experiences in India, where it was effectively kicked out in 2012 after becoming dragged into a major 2G spectrum sale scandal in the country.

In recent months though, Etisalat appears to have rediscovered its taste for overseas diversification, after successfully bidding $5.7bn to buy French conglomerate Vivendi’s 53 percent stake in Moroccan mobile operator Maroc Telecom.

In what appears in some aspects to be another reversal, Zain is also seeking to increase its presence in North Africa by boosting its stake in Morocco’s inwi from its current 15.5 percent. The operator has also said it is looking at similar opportunities in other countries in the region. This comes four years after the group sold the vast majority of its African assets to India’s Bharti Airtel in a $10.7bn agreement.

To what extent then, have the Gulf’s operators rediscovered their appetite for big-ticket acquisitions in foreign shores?

Scott Gegenheimer, the US executive who took over as CEO at Zain in late 2012, says that the company is actively seeking buyout opportunities both in the mobile space and in complementary markets, such as internet service providers (ISPs).

“We are looking for acquisitions, both large mobile operators and also in adjacent markets,” Gegenheimer tells Arabian Business. “I think maybe over the next 18 months to two years, you’ll see much more in the adjacent markets, looking at ISPs, data centre providers, fibre plays and content. On the larger acquisitions we want to stay in the MENA region. North Africa is interesting for us, but the area that is challenging is valuations.”

Gegenheimer adds that Zain does not have a price bracket allocated for acquisitions, but that any buys have to be “realistic” in terms of cost.

Article continued on next page...

Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

NOTE: Comments posted on arabianbusiness.com may be printed in the magazine Arabian Business

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

All comments are subject to approval before appearing

Further reading

Features & Analysis
Why the Qatar hacking incident has revived Gulf tensions

Why the Qatar hacking incident has revived Gulf tensions

Analysts say the incident was far more than a security breach...

The cost of cloud seeding in the UAE

The cost of cloud seeding in the UAE

As the country ramps up efforts to increase artificial rainfall...

Inside Google's brave new world

Inside Google's brave new world

The $500bn technology giant is extending its reach into hardware...

Most Discussed