It may have been called too early. The Gulf’s telecommunications industry, which was euphorically deemed un-touched by the global financial crisis, is realizing that 2009 will be a tougher year than it expected.
Some operators in the Gulf region that are undertaking ambitious overseas expansions may face rough weather as growth in those foreign countries wanes. The projected decline in the Gulf’s population, on the back of an expatriate exodus, is sure to pose problems as well. On top of that, telecom operators will face challenges synergizing acquisitions and minimizing expenditure.
Since funding continues to be a problem both within and outside the industry, innovative solutions such as network sharing, are likely to get more attention as a way to reduce costs and generate new sources of revenue. Their focus is also likely to shift towards boosting the efficiency of business operations. All that should be music to the ears of end-users in the region who, for the first time, are beginning to look at the prospects of reduced tariffs and more value add-ons.
Mobile call charges in the Gulf re-gion may drop by as much as 20 percent this year, mainly due to increasing competition. Customers may also benefit from technological innovation and de-clining project costs, says Booz & Company. If operators and vendors cling to their already fat purse, those at the receiving end of their products and services ought to benefit as well. Whether that will actually happen and when, however, still remains to be seen.
The crisis curse. As the aftershocks of the financial crisis continue to unfold, so do the vulnerabilities associated with it. An EFG-Hermes report on MENA eco-nomies says the expected population decline in some Gulf countries will affect the performance of a number of sectors, including telecommunications.
Kunal Bajaj, an analyst with HSBC Bank Middle East, says the impact of the crisis on Gulf telecom operators will be mainly on the number of subscribers, rather than usage rates. “Telco spend in consumer basket in Middle East is between 1-3 percent. However, because the region has a large number of expatriates, and should expatriates start to leave (which is starting to happen through job cuts), it will have negative impact on subscriber addition,” he says. “However, we don’t expect usage to go down.”

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