The telecommunications sector in the Middle East is thriving with nine organizations included in Forbes’ Middle East Top 100 Listed Companies 2023, making it the third-most represented sector. These nine companies, which include a trio of Saudi telecoms and two in the United Arab Emirates (UAE), had an aggregate market value of $160.4 billion as of April 2023. Many, in recent months, have formed partnerships or made investments aimed at expediting growth.
Here is a look at six recent headlines in the Middle East telecom sector:
Mobily Signs Interconnection Agreement with CMI
Etihad Etisalat Company, also known as Mobily, is the fifth-most valuable operator in the Middle East and the second in Saudi Arabia. In February, at Capacity Middle East 2024 in Dubai, the company signed a partnership agreement with China Mobile International Limited (CMI) with the goal of combining their strengths to improve existing services and develop innovative solutions. Representatives from the companies have said that the partnership could play a significant role in enhancing digital transformation efforts in both markets.
Ooredoo and Zain Partner with TASC Towers Holding
Ooredoo and Zain Group, the third and fourth largest operators in the Middle East, respectively, recently announced a partnership to combine tower assets with TASC Towers Holding, creating a new entity. Zain and Ooredoo will each have a 49.3 percent share in the new entity, which has an estimated enterprise value of $2.2 billion and roughly 30,000 towers throughout the Middle East and North Africa (MENA), including in Qatar, Iraq, and Algeria. The TASC founders are retaining the remaining 1.4 percent ownership stake.
The deal is in line with both Zain and Ooredoo’s strategies, which emphasize value growth for shareholders. Ooredoo leadership expect the new entity to record run-rate revenues of nearly $500 million per year. Moreover, Passive Infrastructure as a Service solutions offered via a TASC partnership model allows other mobile operators access to alternatives to owning and managing passive infrastructure to increase cost-efficiency and help keep up with double digit mobile data consumption growth in MENA. Morgan Stanley and Citigroup Global Markets Ltd. helped facilitate the deal.
Roni Tohme Named New Ooredoo Algeria CEO
Although founded and based in Qatar, Ooredoo operates across several MENA and Southeast Asian countries, including Oman, Myanmar, Tunisia, and Algeria. In August 2023, Ooredoo Group appointed Roni Tohme as the new CEO of Ooredoo Algeria. Tohme previously served as the CFO at Ooredoo Algeria and played a critical role in transforming the business’ finance department into a lean and more profitable operation. He also formerly worked in leadership roles for several other telecoms, including Africell, MTN, and Axiata Group.
Saudi Telecom Invests in Telefonica SA
Saudi Telecom Company (stc Group) is among the largest telecom enterprises in the Middle East with a market value of $59.2 billion and more than $36 billion in assets. In September 2023, the company spent $2.25 billion to purchase a 9.9 percent stake in Telefonica SA, a Madrid, Spain-based carrier that has been struggling to attract investments and grow domestic profits despite the appointment of Jose Maria Alvarez-Pallete as executive chairman in 2016. Overall, stc Group purchased more than 569 million shares in Telefonica.
In anticipation of scrutiny of the transaction from the Spanish government, stc Group, which is controlled by the Saudi government, expressed in a statement that it doesn’t intend to take over Telefonica and instead views it as a “compelling investment opportunity.” It’s the latest in a series of major acquisitions of European operators by Middle East carriers. Saudi Telecom also purchased $1.3 billion worth of telecom assets in Europe in 2023, for example. Emirates Telecommunications Group, rebranded as e& in 2022, paid $2.4 billion for a majority stake in PPF Telecom Group’s Eastern Europe assets.
The GCC ESG Telecommunications Alliance Memorandum of Understanding
Seven Gulf Cooperation Council (GCC) regional telecom operators, including Ooredoo, Omantel, and stc Group, signed the GCC ESG Telecommunications Alliance Memorandum of Understanding (MoU) at the Mobile World Congress 2022. The key goal of the MoU is to reduce carbon emissions across all areas of the value chain, including service creation and use by customers.
The first year of the two-year partnership involved knowledge and experience sharing among all partners. In the second year, the seven telecoms convened to hold workshops on climate action, human rights, and data privacy and cybersecurity. The MoU is up in March 2024, but could be extended if agreed upon by all parties.
“This collaborative effort by the GCC telcos [represents a significant stride] towards positioning the region to [address forthcoming] sustainability challenges and regulatory requirements,” said Ooredoo Group CFO Abdulla Ahmed Al Zaman in a statement.
Ooredoo Group’s GCC Innovation Hub for Power Solutions
Major GCC operators, including Ooredoo, Zain, and e&, are also partnering on another sustainability initiative known as the GCC Innovation Hub for Power Solutions. Working with industry leaders like Huawei and Nokia, the operators are hoping to develop reliable, cost-effective, and environmentally-friendly power solutions using wind and solar power, among other renewable energy sources. Specific objectives include enhancing industry collaboration, developing quality prototyping and testing facilities, and creating effective training programs.