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Telecom in the Middle East

In 2010, as the recession begins to lift in earnest, telecom operators in the Middle East will face a very different world. New business models, new strategies, new technologies, stronger competitors, more demanding customers—all will pose real challenges. The winners will be those with the vision and agility to respond quickly and flexibly to rapidly changing market conditions, developing the capabilities needed to respond to four strategic imperatives.spinning off or selling less-productive assets, and outsourcing noncore operations.

1. The Middle East and surrounding emerging markets are continuing to grow, and the region’s operators must reestablish the momentum they had before the recession if they are to capture their fair share of that growth. However, they will not take the same approach they took before the recession, when growth was secured mainly through deal making—primarily acquisitions and new licenses. Operators will surely resume their inorganic growth through acquisitions, but this time they will simultaneously focus on mastering operations in their promising emerging markets to secure the hoped-for growth. In such markets, they must continue to gain share as quickly as possible. In developed markets, they must develop new value-added services that can differentiate them from competitors.spinning off or selling less-productive assets, and outsourcing noncore operations.
2. Much of the telecom world is rapidly being commoditized, in areas as varied as connectivity, basic services, low-end handsets, and networking equipment—leaving virtually every player in the sector to seek out new sources of value. The clear answer to the problem: innovation in services. Although a focus on service innovation is clearly a priority for operators, the trend is still in its infancy. Thus, this area offers the most innovative players many opportunities for growth—as well as the capacity to be tremendously disruptive to those that can’t keep up.spinning off or selling less-productive assets, and outsourcing noncore operations.
3. Demand for high-speed broadband is increasing all over the world, and the Middle East is no exception. Customers are looking both to improve their Internet experience and to make effective use of a wide range of broadband applications. That demand will be met through wireless connections in emerging markets, and through a combination of wireless and fixed-line access in developed markets. Middle East operators must get on board with this trend, working with policymakers and governments to ensure widespread coverage in a cost-effective manner.spinning off or selling less-productive assets, and outsourcing noncore operations.
4. The changes taking place in all Middle East markets will force every operator to become more efficient, managing costs not just to attain short-term financial stability but also to free up investment capital and become more focused and innovative. To that end, operators should take a strategic approach to cutting costs: investing in the capabilities that differentiate them, spinning off or selling less-productive assets, and outsourcing noncore operations.