Dubai – Deceypha: Political risks and economic challenges in the Middle East and Africa regions are crippling growth potential of the telecom sector, which became difficult to evaluate due to the involvement of voice and data cycles.
The GCC countries have more prospects to grow in that regard compared to other players in Africa and South Asia, driven by the stability of income the Gulf region has, said a recent report published by Arqaam Capital on 4th of April.
Market operators in the GCC started to offer costly-effective programmes, which contributed to “rationalizing” the competition in that region, according to the report.
The telecom sector is negatively affected the multiple taxes it is exposed to and the changeable incomes, said Sarah Shabayek, Head of TMT Research at Arqaam Capital.
“Findings of our thematic score aggregating Market Opportunity Index (MOI) and Operator Positioning Index (OPI) indicate that single-country GCC players fare better, including Ooredoo Oman, STC, Omantel and Vodafone Qatar,” Shabayek explained.
Safaricom in Africa is among the top ten companies with regards to MOI and OPI, while Ooredoo Group was Arqaam’s top pick, “the company is a lagging on valuation compared to other blue chip telco names in the sector and its Free Cash Flow yield of 15-17% during 2017-2019 is expected to lead to further deleveraging as well as a hike in dividends,” according to the report.
Regarding the smartphones penetration, the Africa and MENA regions, excluding the Gulf region, have a high potential, while the Gulf market is more affected by content existence and data pricing factors.
By Decypha Editorial Team
