A busy agenda

Booz & Co predicts a busy year ahead for MENA telcos
Adel Belcaid, principal, Booz & Company. (click on image to see second photo)
Adel Belcaid, principal, Booz & Company. (click on image to see second photo)
David Tusa, partner, Booz & Company.
David Tusa, partner, Booz & Company.


As regional telecom operators start to progress through 2012, it is worthwhile to reflect on the events of 2011— the year that the telecom industry, globally and regionally, finally managed to come to terms with two major global shocks.

The first, of course, was the global economic downturn that continues to adversely affect the performance of operators around the world. Growth naturally slowed, abetted by constrained credit markets, and thus accelerated the commoditization of traditional telecom services, while reducing the valuations of operators large and small. As a result, operators focused on cutting costs and increasing operational efficiency to protect their profitability. This has led to an increase in network sharing agreements, such as the agreement between Saudi Telecom and Mobily earlier this year.

The second shock has been the disruption caused by mass digitisation. Customers—both consumers and businesses—have become more demanding, expecting always-on service everywhere thanks to ever-more capable smartphones and tablets, and forcing operators to boost network capacity and connectivity. The number of broadband lines, primarily mobile lines, in the MENA region is expected to reach more than 150 million by 2015 to meet this demand. In parallel, the market for mobile applications continues to grow rapidly, creating yet another disruptive force that operators must use to their advantage. On the enterprise side, all manner of industries are becoming increasingly digitized and demanding a variety of new services such as mobile payment platforms and cloud computing.

In the wake of these changes, operators must realise that the integrated technology value chain on which they have long depended—including proprietary networks, critical applications, and billing platforms—is growing more modular and open and thus beyond their control. As a result, the telecom ecosystem is becoming much more competitive: New entrants from adjacent industries will exploit customers’ expectations and technological innovation to seriously challenge telecom operators in their walled-no-more backyards.

In 2012, we expect that all of these trends will be exacerbated. For operators that have not done so already, and there are many, this will be the year to make the strategic choices that will determine their future direction in the radically changed competitive landscape. These decisions should depend both on whether operators can effectively leverage the capabilities they already have and on careful consideration of their ability to build new ones—either organically or through strategic partnerships.

In addition, the regional telecom industry will see increased spending on infrastructure, as the 4G technology wave crosses the chasm past early adopters and goes progressively mainstream. After the first-mover LTE deployments of Saudi Telecom and Etisalat, there is more pressure on other regional players, incumbents and challengers alike, to go beyond trials and launch their own commercial LTE services. However, we don’t see commercial LTE offerings as becoming ubiquitous, at least initially. Instead, they will be limited to select metropolitan areas and data-hungry market segments for much of 2012 and probably 2013. LTE-capable handsets will also take some time to materialize, and will be preceded by mobile internet dongles at relatively high price points. In the meantime, HSPA+ services will continue to be deployed as the closest alternative to LTE; some operators are already advertising HSPA+ as 4G with the full blessing of regulators.

All in all, we expect 2012 to be an interesting year for the regional telecom industry, with a heightened and multifaceted competitive landscape that will see telecom operators, handset manufacturers, search engines, and content providers all competing for the same customers. With the ensuing and unprecedented choice of services and devices, end users will emerge as the biggest winners of the ongoing remaking of the industry.

David Tusa, Partner, and Adel Belcaid, Principal, Booz & Company

Editor's Choice

Deception technologies, AI and Robo Hunters to  displace legacy cybersecurity solutions
IoT is rapidly expanding the attack surface of the digital enterprise and exposing it to enhanced risk levels not seen before. Deception technologies, artificial intelligence, Robo-hunters, are solutions for tomorrow's enterprise, Mechelle Buys Du Plessis, MD – UAE, Dimension Data.
The robots are coming: Impact of AI on executive search
As the technology industry’s elite struggle to agree on the potential impact of AI and a raft of people queuing up to advise on the potential disruption it will cause, this article by John Curtis-Oliver, Partner at Boyden studies the potential impact on the executive hiring and the executive search industry.
#MWC2018: Spotlight shines on 5G, IoT and AR
Hard to predict what will ‘turn around the fate’ of telecom operators, but there is potential for those who can play the role of enabling platform for new digital services and players, as well as for new features and capabilities across traditional industries, says Luis Cirne, partner, communications, media and technology (CMT) practice at Oliver Wyman

Most popular

Don't Miss a Story

You may also like

Can AI give wings to the MVNO business model?
In the MVNO business, an ordinary performance is not enough to succeed. It requires speed, lean operation and efficient monetisation capabilities.
Internet of Broken Things? 10 key facts about IoT
It’s crazy to think that devices with the potential to enable so much damage to homes, businesses and even entire cities often lack basic security design, implementation and testing.
The Why, the What and the How of a digital transformation
For business-driven organisations, expected revenue-generation/benefits supported by a bold vision of the digital services/roadmap, help a lot in re-adapting mentalities of the decision-makers in place, stabilising the focus, and optimising the magnitude of the innovation.
Availability: Why it must be a vital tool for cloud service providers in the Middle East
As it becomes more important to differentiate in the cloud provision market, one of the primary areas a CSP can sell itself is in making assurances about service availability, data protection and backup. In other words, removing the risk of things that let customers down and make the news in the process (as much as possible).