Growth opportunities across the Middle East and Africa became scarce and limited due to the entanglement of voice and data cycles, macroeconomic challenges, and political risks in the region, a report by Arqaam Capital showed.
GCC telecommunication operators will outperform other operators, according to Arqaam’s in-house developed Market Opportunity Index (MOI) and Operator Positioning Index (OPI).
GCC players will perform better due to higher disposable income, as GCC governments, except for Kuwait, have already decided on taxation changes, Arqaam said, adding that the macro economy has helped companies to introduce cost-efficiency programmes and manage their capital expenditure.
“We believe that for the GCC the worst is behind us, with consumer spending already squeezed in 2016 and taxation changes addressed in most markets under coverage,” Sarah Shabayek, head of TMT Research at Arqaam, noted.
Arqaam’s indices indicated that single-country GCC firms, such as Ooredoo Oman, STC, Omantel, and Vodafone Qatar, perform better than multi-country corporates which are weighed on by their subsidiaries in riskier markets, she added.
Ooredoo Group topped the sector’s players, according to Arqaam, as it offers both exposure to the stable Qatari market and growth from other markets.
The report expects SIM penetration to grow across the board driven by multi-SIMs, with Africa and South Asia to boast above average subscriber growth, while successful pricing strategies in the GCC will lead operators to diversify away from the core telecom business.
“We see smartphone penetration as a key catalyst for higher levels of mobile data growth,” Shabayek mentioned, adding that “there is growth potential across Africa and MENA, excluding GCC, for higher mobile data penetration supported by improving smartphone penetration.”
