Telecom jan2013

bq | TECH l GCC TELECOM

49

MAKING THE CALL As it eagerly embraces new technologies and new market realities, the GCC is keeping a close eye on competition and revenue-generating opportunities

By Rabin Gupta and Shereen D’Souza, Doha

Kyle Whitehill, CEO, Vodafone Qatar

Smart phones and other latest handheld devices in everyone’s hands are just a microcosm of the telecom tidal wave that has hit the GCC region. As countries throughout the world become increasingly connected, the GCC is certainly not a region to be left behind. GCC telecom operators are increasingly adapting to the new market realities, and many are going the extra mile to ensure that there is a clear line of distinction from the competition.

A.T. Kearney reveals that GCC telecom companies are focusing on redefining their service portfolios, improving the customer experience, and tapping into the opportunities that datasavvy consumers, businesses, and governments offer.

Success in the next few years will depend on creating synergy across product portfolios and adjusting operating models to meet these new trends head on. The telecom sector in the GCC has witnessed quite a dramatic growth curve and despite the sector reaching its saturation point while dealing with the growing number of competitors post the financial crisis in 2008, the region has liberalised and evolved in this field, making way for some positive changes. www.bqdoha.com

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bq | TECH l GCC TELECOM

50

Company

Country

Zain Wataniya Telecom

Kuwait Kuwait

MktCap

Price*(in LC)

(USD mn)

10,009 3,937

0.66 2.2

Saudi Saudi Arabia 20,960 Telecom Mobily Saudi Arabia 12,985 Etisalat UAE 19,593 Ooredoo Qatar 9,328 Vodafone Qatar 2,096 Omantel Oman 2,578 Batelco Bahrain 1,505 Source: Global Research, Zawya, Bloomberg Between 2008 and 2011, the GCC telecom industry fell to a meagre four percent compound annual growth rate (CAGR) and several major players burnt their fingers in the race for acquisitions. According to a report by Kuwait and Middle East Financial Investment Company (KMEFIC), most GCC telecom companies saw their stocks decline over the past seven years, with CAGRs ranging from -19.4 percent to five percent.

While the regulatory environment in the GCC has liberalised it leans towards a duopoly model, which means incumbent operators must invest in their own R&D, localisation of global network products or forging strategic partnerships to drive in-market innovation of services and products

39.3 67 9.1 106.3 9.05 1.32 0.4

Stock performance 1m -5.70%

3m -10.80% -4.40%

12m -30.50% -10.00%

8.60%

-2.50%

14.90%

3.10% 3.10% 27.60% -1.20% 4.00% -11.60% 1.00% -10.60% 4.80% 0.10% 0.20% 23.00% 0.80% 3.00% 26.60% -13.00% -14.10% -2.00% * Market price as on Aug 2012

Mobile technology and services continue to be key drivers of the information society, according to the International Telecommunication Union (ITU), as mobile-broadband networks are allowing more people and businesses to connect to high-speed networks and benefit from a growing number of applications and services. Kyle Whitehill, CEO of Vodafone Qatar says: “There is a high demand for next generation high-speed products and services from affluent GCC customers and this is fuelled by government- and private-sector investment in fibre optic infrastructure which provides a future- proof backbone for rapid ICT development, creating an ideal market for service innovation among operators.”

Regulatory framework Whitehill says increased competition among operators has led to more competitive pricing and improved customer services, which are being modelled on best practice innovations in the US and Europe. “While the regulatory environment in the GCC has liberalised it leans towards a duopoly model, which means incumbent operators must invest in their own research and development (R&D), localisation of global network products or forging strategic partnerships

Market share based on subscribers in Qatar 80.00%

73.00%

71.50%

67.00%

70.00% 60.00% 50.00% 40.00% 30.00%

27.00%

33.00%

28.50%

20.00% 10.00% 0.00% 2011 Source: Global Research, bq

to drive in-market innovation of services and products. Operators must also work around a tighter regulatory framework regarding data encryption and VOIP (voice over Internet protocol), so there is a slower rate of growth compared to other markets.”

“Mobile Broadband is the fastest-growing technology in history, with global subscriptions growing 30 percent a year, according to the ITU. We’re supporting this growth across our footprint, and see strong opportunity in Asia, where a large proportion of the population will first access the Internet through mobile devices. There is a need for new networks, increased availability of low-cost devices, and better government understanding on issues around regulation and licensing,” said Dr. Nasser Marafih, CEO of Ooredoo Group during a panel discussion at a recent ITU event.

The most significant and double digit declines came from Nawras, STC, and DU. Only two stocks, Wataniya and Vodafone Qatar, broke the trend and witnessed an increase over the mentioned period, growing at a CAGR of 5.01 percent and 2.54 percent respectively. Whitehill adds: “We currently enjoy 33% market share and have a very strong plan to grow the company even further especially in the areas of fixed and enterprise services. Already more than one million customers, in just four years of operations, are actively using our network every day which means 58% of the population are Vodafone Qatar customers.”

2012

Vodafone

2013

Ooredoo

Data explosion The Middle East has not been immune to the worldwide explosion in data, driven by data-savvy consumers and the deployment of a vast portfolio of mobile applications.

Statistics from YouTube, which accounts for 24 percent of global mobile traffic, reveal that Saudi Arabia has the world's most YouTube clicks per Internet user (more than 90 million daily page views). The Middle East ranks second after the United States in number of daily views, with 167 million video views per day. The Middle East and Africa are expected to have year-on-year data increases of 133 percent through 2014, according to Cisco.

The demand for data is rising and operators are constantly under pressure to roll out new technologies. Fiber optic networks and 4G are part of the agenda besides network capacity expansion. All this, while trying to maintain company profitability and a healthy balance sheet. According to Pyramid Research, third-party application stores such as Apple’s and Google’s have completely taken over operators’ portals and revenues from mobile application downloads are set to surge from US$8.4 billion in 2009 to US$23.6 billion in 2014, with operators capturing only a fragment of that value.

www.bqdoha.com

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bq | TECH l IN CONTEXT

Broadband at the fore Several GCC telecom operators are continually making huge investments in fibre networks and Internet-protocol television (IPTV) platforms, although the financial returns may not be clear. Newer players are competing with embedded media ecosystems like Netflix streaming. “With the introduction of broadband services, there has been a paradigm shift in connectivity as the focus shifts from fixed line to next generation digital services. For enterprise customers, big data, cloud computing and 4G services are making the transmission of data faster and more cost effective, while machine to machine (M2M) services are opening the potential for automated communication of data between connected devices, which means new business intelligence, operational efficiencies, and revenue-generating opportunities,” explains Whitehill.

Statistics from YouTube, which accounts for 24 percent of global mobile traffic, reveal that Saudi Arabia has the world's most YouTube clicks per Internet user (more than 90 million daily page views)

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A view into the threat landscape

Mahmoud Samy, area head, Middle East, Pakistan and Afghanistan at Arbor Networks

Dubai - Arbor Networks’ recently launched advanced threat portal combines Arbor’s unique threat intelligence and analysis with industry-wide news and social media content. The Atlas Threat Portal features information from the Atlas active threat level analysis system, a unique collaboration between Arbor and more than 275 service provider customers globally.

These customers share anonymous traffic data from their product deployments with Arbor, totalling 70 Tbps of peak traffic, in order to generate a globally scoped view into the threat landscape. This massive data set gives Arbor’s security

engineering & response team (ASERT) a unique position to study malware, botnets and DDoS attacks that threaten network infrastructure and services. The ASERT blog has been updated and incorporated into the portal to provide technical, in-depth analysis of Internet traffic trends, DDoS attacks, new malware families and other advanced threats.

The Atlas Threat Portal also features a unique collaboration between Arbor and Google Ideas called the digital attack map.

Google Ideas used anonymous data from Arbor Networks’ Atlas to build a data visualization that allows users to explore historical trends in DDoS attacks, and make the connection to related news events on any given day. The data is updated daily, and historical data can be viewed for all countries. Mahmoud Samy, area head, Middle East, Pakistan and Afghanistan at Arbor Networks said, “The Middle East has seen a number of high profile cyber attacks in recent years and regional enterprises are now beginning to pay closer attention to monitoring these threats. As such, the Atlas Threat Portal is an excellent resource for companies in this region to gain an understanding and keep abreast of the latest security risks, which will help them put relevant measures and technology in place to ensure data protection and business continuity.”

Qatar’s digital agenda Qatar is no stranger to this trend, and now ranks as the most connected country in the GCC according to the ITU. Customer service is also becoming more advanced and personalised, with improved and innovative billing solutions and the rise of mobile payment service. “Qatar’s digital agenda is benefitting from the QR6.2 billion earmarked as investment in the ICT sector by 2015. Global tech firms are increasingly seeking to invest in the state, with next-generation access networks providing ultrafast connectivity, making services more widespread and reliable. Qatar's mobile, fixed-line and internet sectors are among the highest value in the world, with average revenue per user (ARPU) levels supported by high incomes.”

Qatar’s population, which is expected to surpass two million by end of 2013, means expanded opportunities. “We have seen the quality of data being consumed on the mobile network triple in the last year and we expect this trend to continue. The business segment is developing quickly as new companies set up to help deliver the Qatar vision for 2030 and this is creating an opportunity to provide innovative services and improve the overall communication infrastructure across the country,” concludes Whitehill.

Microsoft Qatar announces Surface

Qatar - Microsoft Qatar has announced that Microsoft Surface, a tablet PC designed to be the ultimate stage for Windows, is now available for purchase by commercial organizations through dealers Mannai Corporation. Speaking at the launch event in Qatar, Naim Yazbeck, Microsoft Qatar general manager, said “At Microsoft we know that mobility is a trend that has emerged for businesses, who today require technology to be available on-the-go, in a manner that is secure and customizable. We are committed to providing devices and services that fulfill business requirements and the growing

need for mobility in Qatar.” Surface was first piloted in select schools in Qatar starting the last academic year with the Supreme Education Council.

Surface 2 and Surface Pro 2 each benefit from significant updates, including improvements to processing power and battery life, to display and camera resolution, and to the Kickstand, now with dual angles, so it’s more comfortable to use your Surface on your lap or at your desk. Enhancements in Windows RT 8.1 and Windows 8.1 Pro make Surface 2 and Surface Pro 2 even more powerful and customizable. www.bqdoha.com

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