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Slippery slope—Pressure increases on GCC Telco operators
Demanding consumers expect operators to provide an “all you can consume” internet model via ubiquitous bandwidth and the latest services at low flat rates; will and can the GCC telecos rise to the challenge?
August 28, 2011 4:30 by p.deleon
Though being late to the party is disadvantageous in many aspects, it does allow one the ability to learn most thoroughly from the mistakes of the past. And nothing, could benefit or describe the GCC telecos better than the former statement. Though, the relatively immature teleco markets of the GCC have yet to experience some of the major setbacks to profitability like there global counterparts, a recent report from Booz and Company suggest that trends such as stagnating growth; heightened competition; and growing consumer sophistication are starting to emerge in the GCC as the sector grows in the region. And yet, the still stand to benefit from the global telecom experiences. In the most recent report Booz and Co outlined the three key trends that are restraining the global telecos markets, from which the GCC .
Stagnating Growth. The report noted that many of the global telecommunications market have been stagnating as they approach their saturation point, as exemplified by high penetration rates. In such circumstances operators need to prepare for the great storm, one in which subscription rates slow down and stop altogether.
Increasing Competition and Market Fragmentation: the increase in the number of operators has steadily outpaced that of market revenues. For instance, the number of telecom operators has increased by 70 percent since 2005, whereas industry revenues increased by only 45 percent over the same period. Facility-based operators have grown by 6 percent per year, while mobile virtual network operators (MVNOs) and Internet service providers have grown at over 15 percent a year.
Sophistication of Customer Tastes and Expectations: As Booz & Company partner Hilal Halaoui, pointed out: “The GCC region recently has seen increases in competition and market fragmentation, as well as a slowdown in growth. Based on the experiences in the other more mature markets, it, too, will soon face added pressure from consumers. In response, operators will need to prepare for constrained growth and compensate by creating leaner organisations. Essentially, regional incumbents will have to increase their marketing expenditures, and in turn, try to reduce many other costs.” Then again, because the GCC telecos still leave a lot to be desired, the changing consumer trends of more sophisticated customers are not so much a threat as an opportunity waiting to be capitalised. The question is, will the GCC telecos rise to the challenge?