Telecoms Market Report

8/22/2019 Telecoms Market Report

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Market Report

30 September 2 October

Jumeirah Beach Hotel, Dubai, UAE

Visit our website: www.terrapinn.com/twme


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Our MissionThis report is designed to share with you the biggest drivers, disruptions, innovations and investments that are re-engineering the telco industry in the Middle East.

The telecoms industry is acing exciting and somewhat daunting times ahead. Weve entered an era where ongoing

digitization is throwing up new revenue opportunities or telcos, whilst creating more competition, higher expectations with

more investment needed. Operators are let with a stark choice: pioneer or perish!

Research Methodology

This market report has been produced by accumulating stats rom our Telecoms World Middle East Survey, where insights

rom regional telecoms operators were derived through a multiple choice questionnaire. Specically designed questions

ensured we picked telco's brains on what were the most pressing challenges on their mind and what opportunities werethey most excited about.

A dedicated Content Manager also complimented this survey by delving into the latest reports, whitepapers and videos

that seek to understand the disruptive changes to this dynamic industry. Insights were also taken rom the Telecoms

World Middle East 2012 event, whereby regional telco CEOs poured into Dubai in October 2012 to debate whats new,

whats hot and whats next or this rapidly evolving industry.

These research methods collide to provide you with an unrivalled outlook on upcoming investments, the latest services

and business models that will lead to urther innovation in

the Middle East telco market.


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Thank you to our contributing organizations that shared their insights:

Batelco, du, Saudi Oger, Vodaone Qatar, Mobinil, Etisalcom Bahrain, Ministry o Telecommunications Palestine, Omantel,

Nawras, Zain Group, Etisalat, Orascom Telecom, Qtel, Mobily, Zain Jordan and Wataniya Telecom.

In this market report we delve into the hottest trends and most lucrative opportunities:

Connectedeconomy,connectedlife:puttingtelcosattheepicenter

Thenetwork:thegatewayandbackboneofthecompetitivetelco

Threefoldserviceinnovationandtheriseofenterprise

Goingglobal:accessingmarketsthatareripeforthepicking!

Thank you or downloading our Telecoms World Middle East Market Report. We hope you enjoy the read!

Chloe Higman

Conerence ManagerTerrapinn Middle East

+971 4 440 2560 | [email protected]


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Connected Economy,

Connected LifeMiddle East telcos are grappling to uture-proo their business model, as ICT continues to converge with new industries.

From health to transport, entertainment to banking, telcos own the connectivity that these industries are craving. With ongoing

digitization o all industries, the telco business model is constantly evolving, demanding new capabilities to capture market share in

new sectors.

The CEO o du, Osman Sultan, opened Telecoms World Middle East 2012 with a bold statement:

As such, telcos have been presented with a vast and overwhelming opportunity to be at

the epicenter o the economy and o lie. To capitalise on this privilege, telcos must build

a culture o continuous change whilst exploring and experimenting with innovation. Telcos

need not think o themselves as gatekeepers, but as enablers o a connected economy and

a connected lie.

OTT: Friend or Foe?

While telcos might be dabbling in other markets, OTT players have stormed the telco

industry transorming customer expectations, services and network requirements. Taken

by surprise, telcos have struggled to monetize these OTT players, giving them a ree ride on

their network in order to satisy escalating consumer demand or content services. What this

means is that telcos are ooting the bill without reaping the benets.

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"Being connected is a basic human right. Connectivity is ast becoming the cornerstone o all businesses, all industries

and all liestyles. Regardless o economic climate, political turmoil or social change, the need to be connected is resilient

to external pressures."


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But the telco is fghting back

Far rom out o the race, telcos are recognising that collaborating, rather than competing with OTTs, is the way to win in

this content-hungry environment. OTTs have undeniably captured consumer mindshare and money with their cutting-edge

services that boast inspiring design and advanced usability. Rashid Abdulla, CEO, Batelco argued that telcos do not

have the right DNA to replicate OTTs service creation yet have very tangible assets to remain at the epicenter o the world o

content.

So what are those assets? Telcos own connectivity their network is the gateway to this world o rich multimedia services.

This asset coupled with an unrivalled customer base and advanced billing capabilities, arms telcos with bargaining power to

carve out a more competitive position in the uture.

By backing partnerships with OTT players, rather than seeking to eliminate them, telcos can enjoy an innovative and diverse

product portolio whilst monetizing the data trac on their network through service delivery platorms. They have a strong

hand; they just have to learn how to play it.

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Telcos are not in the rontline o revenue streams, but they are in the rontline o investments

Osman Sultan, CEO, du

A win-win with OTTs is

more than possible putting

us on the threshold o

antastic new services

Ross Cormack, CEO, Nawras


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Telcos need to exist with a

relevant voice in the new ast

moving digital space

Osman Sultan, CEO, du

The biggest challenge

or operators right now is

creating and maintaining a

relevant relationship with the

customer with services and

experience

Hatem Dowidar, CEO, Vodaone Egypt

History has shown that OTTs

will come and go, whereas

telcos have longevity in the

market

Daniel Ritz, Chie Strategy Ofcer, Etisalat

Group

Operators need to reinvent

themselves

Hisham Akbar, Deputy CEO & COO, Zain

Group

C-Suite insights on re-invention or relevance

With the world o content opening the telco industry to a plethora o new players, telcos have ound themselves ghting or the

customer. Our Telecoms World Middle East 2012 CEO debate revealed that staying relevant to the consumer was ront-o-

mind or those leading the regional telecom industry.


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The NetworkThe data explosion rom all these new services is putting immense pressure on the telco network.LTE has emerged as the

champion o networks, capable o managing the exponential growth in data trac.

LTE investment and roll out is well underway in all corners o the world. LTE allows operators to optimise bandwidth on the network

and oset some o the pressure generated by data consumption. LTE can also optimise network costs by eliminating the costs

associated with operating multiple inrastructure sites.

LTE is expected to completely revolutionise customer experience by enhancing the quality and reliability o the network and enabling

real-time streaming and rapid downloads.

LTE is a game changer or operators, who are now armed with uture technology to create next generation services. Investment is

thereore crucial to meeting the rising connectivity demands o GenM. Daniel Ritz, Chie Strategy Ocer oEtisalat Group argued

that regulators cannot step in to nance network investment as it is too dynamic to be regulated.

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say that Content Delivery Networks are an essential investment59%

say its important, with only stating this was not a pr ior ity or their business35% 6%

In our recent survey, we asked regional operators which technology investments are vital to successully roll out new services.

stating this was not a priority ortheir business9%

say that LTE is an

essential investment59%say itsimportant,

with only32%

say that WIMAXis an

essential investment

stating this was not a

priority or their business

21% 65%

say its important,

with an outstanding

14%


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Our survey suggests:

LTE is a must-have not nice-to-have technology or operators looking to innovate their oering. Given nearly 3/5 o respondents

cited LTE as an essential investment, the Middle East can expect to witness commercial launches and nation-wide roll-out.

With only 6% o respondents not prioritising CDN, it is anticipated that content services will continue to reign consumption on

the network, and this demand or multimedia will only increase. It is also indicative o telcos prioritising user experience o dataconsumption.

WIMAX technology is struggling to attract investment rom Middle East operators, with our survey revealing that over 65% o telcos

are spending their budget elsewhere.

Bringing LTE to market

Rolling out the network is just the beginning. Developing a go-to-market strategy or LTE is crucial to secure ROI on investment,

accelerate uptake and exploit the networks advanced capabilities. When LTE rst exploded onto the scene in Sweden back in 2009,

the availability o LTE devices was limited. With this gradually trending in the right direction, a range o LTE devices now exist to propel

LTE subscriptions.

So how should operators design pricing plans or LTE? Whilst most consumers cant imagine their lives unconnected, operators are

aced with a pricing predicament. Kim Larsen took to the stage at Telecoms World Middle East 2012 to share LTE launch strategy

and ambitions. As the ormer SVP o Next Generation Technologies or Deutsche Telekom, Kim perectly surmised the root o the

LTE tari predicament:

Consumers now take the

internet or granted

Kim Larsen, Director o TechnologyTransormation, Qtel


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Consumers buy services, not connectivity. They expect connectivity. Here lies the operator tari challenge. While

LTE provides higher bandwidth and lower latency, which justies a premium oering, it is the LTE services which

determine the subscription rate. The LTE generation o services is set to be dominated by video content. In more

developed LTE markets, in Europe and Asia or example, LTE taris were considerably higher than 3G taris when

initially launched. However, market competition has lowered the premium, where it is anticipate that growingcompetition will erode the tari even urther. Thus Middle East operators need to strategically map out cost and

usage caps which deliver revenues whilst propelling uptake.

So in with the new and out with the old?

While LTE investment and rollout is likely to dominate network innovation over the next 12 months, it is crucial

that operators avoid neglecting legacy networks. LTE reach will be concentrated in urban areas in its early

deployment, thereore maintaining core network architecture is vital to deliver consistent connectivity to all

customers.


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Threefold Service

InnovationRetail, wholesale and enterprise services are being injected with innovation. With customers demanding more bespoke, personalized

and interactive services, operators are being pushed to re-design product portolios and set new benchmarks in service creation and

delivery.

Data consumption, digital service demand and the rise o OTTs are irreversible trends that are spinning the telecoms industry into

redesign.

As Martinshared the secrets to creating brand advocacy at Telecoms World Middle East 2012, he touched upon the key capability that

will dene competitive advantage - the need or speed. Getting innovation to market quickly, and re-engineering the process o ordermanagement, will set apart those pioneering the industry to those playing catch up.

Re-inventing Retail

No content service has experienced such phenomenal and rapid growth as the apps oering.

Pioneered by Apple, there is now o rush o device manuacturers, telcos and contentowners seeking to replicate Apples success. The Apps market seemed to appear rom

nowhere. Typical o Apple innovations, they spread like wild re, disrupting business models,

communication and entire industries. With consumers app happy, telcos need to carve out a

relevant position in the app and content ecosystem to thrive, not just survive. Operators oten

nd themselves in the ring line regarding their ability to attract developers and source and

produce engaging multimedia.

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Innovation is instantly copied

Martin Lyne, CMO, Nawras


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The risk o OTT market entrance is that brands are becoming more relevant to the customer, sidelining the telcos as dumb pipes.

Telcos need to start claiming revenues alongside OTTs and dene a monetisation strategy which delivers their air share o the prize.

User interace design is earning more attention rom operators. OTTs have upped the stakes in interace design, creating one touch

services that prioritise simplicity and user experience. Whilst there is increased technical complexity with new services, this complexity

must be removed rom the user experience, humanising the technology.

Data Dependent Wholesale

Wholesale has never had more opportunity to rival retail in the revenue stakes. While OTTs, content owners and MVNOs might be

challenging retails market position, they are wholesales most lucrative customer.

As capacity markets have become increasingly commoditised, carriers have realise they can no longer rely on the acility leasing

agreement which used to make up their prots. Instead, carriers need to ocus on how they can create bespoke data-driven

services, aligning uture service plans with network innovation to optimise the wholesale portolio.

With CDN spend on the up, carriers are now empowered to adopt a service-orientated business model that capitalizes on content

aggregators. By having a network equipped with enabling platorms to monetise bandwidth, carriers can cash in on data demand.


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The Rise o Enterprise

With ICT becoming the cornerstone o all businesses and all industries, the enterprise opportunity is huge or operators.

mHealth, mAdvertising, smart cities, cloud, M2M and managed services are only a ew o those services which are

creating lucrative revenue opportunities or telcos.

Building capability in enterprise solutions will earn operators a competitive advantage, allowing them to create a diverseand protable enterprise portolio with global potential and scale. At Telecoms World Middle East 2012, Sprint shared

LTE service innovations, with M2M at the epicenter o opportunity.

Enterprise will require investment - Investment in knowledge and investment in technology.

The Middle East presents a huge opportunity or

the global M2M market

Ron Jubainville, Head o I nternational Product Marketing, Sprint

Launching venture unds that uel innovation and

create ecosystems or apps, content and enterprise

should be prioritized

Hatem Dowidar, CEO, Vodaone Egypt


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Services Survey

We asked regional operators what services they were currently oering, what service they planned to launch and what services

they were not planning to oer.

mCommerce

Consumer Cloud

Enterprise Cloud

mAdvertising

mHealth

M2M

App Store

IPTV

Mobile Gaming

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IPTVis currently

oered by over 50%o respondents,

with a urther 33%

planning to launch

IPTV in the next 12

months. With

network innovation

improving live

streaming and

download speeds,

this service is set to

soar.

Consumer Cloud

is on the thresholdo market entry with

62% planning to oer

this service over the

next 12 months.

App Store launch

has received mixedreviews, with 21% o

respondents opting

out o this service.

This is indicative o

operators dabbling

in dierent business

models, whereby

some seek to source

and create apps and

others compete with

an access role.

mHealth is a

growing enterpriseservice with 74% o

respondent either

currently oering or

planning to oer this

service.

M2M has not

gathered as muchmomentum as

initially anticipated,

however with the

LTE device market

fourishing, over 50%

o respondents are

looking to launch this

service over the next

12 months.


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Going Global

3%

41%

56%

79%24%

18%

12%

We asked regional operators which regions they thought presented good investment opportunities

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The Money on the Map:

The markets which are set to capture more investment

18% Asia-Pacic 24% Central Asia 41% North Arica 56%Arica 12%CIS

3%Latin America 79%Middle East


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The Art o Acquisitions:

Many Middle East operators have ound a ooting in new markets, expanding their brand and business into regions that hold great

promise or revenue gain and customer acquisition.

At Telecoms World Middle East 2012, Rashid Abdulla, CEO oBatelco argued that the uture strategic direction is unclear as

operators ace rising pressure rom shareholders to deliver traditional prot margins, which are eroding with the dominance o data

services. Operators have aced gradual decline in revenues due to radical change in consumer communication and the rise o

data trac.

There has been a notable political shit in the Middle East over the last 18 months, which has opened once-closed markets to

investment. With Egypt, Libya, Bahrain, Lebanon, Aghanistan, Iraq and Syria suering rom political turmoil, investment is now

necessary to re-develop these nations through connectivity.

Managing risk, winning licenses and nancing acquisition will be boardroom priorities or telcos looks to expand their ootprint and

capitalize on new markets.

Market competition:Dening ideal market competition was one o the hot topics debates at Telecoms World Middle East 2012. Daniel Ritz, Chie

Strategy Ocer at Etisalat Group argued that 3 to 4 operators allowed or a market to be saturated with healthy competition.

Too many operators overwhelm a market and serve only to damage the nations connectivity needs.

MVNOs are somewhat making a comeback in the Middle East. With most countries having

a limited number o operators, MVNOs can provide customers with an alternative service,

oster a culture o product innovation and create lucrative wholesale opportunities or

existing operators. Regulatory authorities across the region are issuing licenses or MVNO

entry; however the Oman is still the only country in the region that can boast ully operating

MVNOs.

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Telecoms Market Report