The Arab world is getting more and more active in telecoms in recent years. Operators from the Middle East and particularly from the Gulf area are causing prices going up in privatization and concession bids all around the region. Saudi Oger was the winner in Turk Telekom privization, with Etisalat as the runner-up. A few months later, Orascom, Etisalat and MTS fought each other for Telsim, the second largest GSM operator in Turkey. Orascom, MTS and Etisalat were competing in Algeria as well. Etisalat won the bids for the third GSM license in Egypt in front of almost half a dozen regional operators just last month, the privatization of PTCL in Pakistan last year, and the second GSM license in Saudi Arabia the year before.
In short, the Arab operators are now everywhere.. But what is their strategy? What are their strengths and limits?
We asked these questions to Husam Bodeur, Managing Director of CETEL, the telecoms subsidiary of Calik Group. Mr Bodeur is quite acquainted with most of these operators either as partners or rivals.
Turk-internet.com : Mr.Bodeur, we have been observing that the Arab world is now heavily investing in telecoms, in other countries. Could you tell us what is happening? What are their strengths or chances? How far can they go?
Husam Bodeur : Two major developments took place following 9/11: Most Arab funds escaped from the US and Western Europe due to widespread resentment towards Muslims and the Middle East. And soon after US-led invasion of Iraq, oil prices and therefore petrodollar accounts of the Gulf States skyrocketed. One of the smart things to do with these ever increasing funds is turning them into infrastructure assets and concessions which would make them safer and even bigger in the long run, let alone the strategic advantages that come with the ownership of telecom operations in other countries.
The fact that Western operators are still licking their wounds since the turndown of global telecom sector only made it easier for the Arab operators. This is why I am not surprised to see that they are signing deals in previously French- or British-dominated Africa and the Middle East. I know some of them are interested in South America as well. And I don’t see any reason, why they should not get a hold of certain North American and European operators.
Turk-internet.com : Is it any different for mobile sector?
Husam Bodeur : Not really. They just look at every deal as an investment opportunity. Some of them are experienced only in mobile or fixed. Some are trying for the first time as in Turkey. Some like Etisalat knows telecoms business all too well, and even takes it to a higher level such as 3G in mobile and broadband in fixed. I am not saying this because Etisalat was our partner in Turk Telekom deal. Etisalat became our partner because they had all these necessary capabilities and experience.
Going back to your question, the adoption of mobile services has to do with three major parameters: economy, geography, and culture. These parameters do not have the same effect in the Middle East and, say, North America. Even within the Middle East, economic parameters are different from country to country although geography and culture are somewhat akin. But, of course, one should bear in mind that these are mostly city states or small countries that are extremely rich, thanks to oil and trade. So it is much easier to roll out. You can try anything in these countries without risking all.
Turk-internet.com : How do the equipment suppliers are dealing with these new customers? Are they following different strategies in that part of the world?
Husam Bodeur : Western giants such as WorldCom and France Telecom had all suffered from expensive investments in the latest technologies like 3G or DWDM but the adoption and return were slow while the geography they had to cover was vast.
With such enormous financial strength and easy geographic coverage, the Gulf States are the prime targets for all equipment suppliers. There were a lot of cutting edge technologies in line right before the collapse of demand in the Western world. The vendors now have new clients willing to connect their cities in the most modern way possible. Once that target is achieved to the level of over-investment, these clients then turn their attention to other markets to invest. The establishment of good relations with these operators is key. Not only for the vendors but also for the consultants and investment banks. The stake is huge. Most vendors now act like “pro bono” consultants to their clients to steer them into larger markets in other countries which could use more equipment.
turk-internet.com : Can you give any example of these cutting edge solutions?
Husam Bodeur : Alcatel, for instance, was able to find clients for its Managed Communication Services because it only needed broadband infrastructure, IP-based network, converge of fixed and mobile services and, on top of all, financial sponsors. IP-PBX is quite a common tool. It is possible to have leased-line management for PSTNs and IP-VPN applications for NGN.
Motorola, on the other hand, has taken the lead in Wi-Max and managed to land the largest deal to date in Pakistan.
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