As few as four corporations are expected to control the telecommunications industry in the Middle East within four years as consolidation continues apace, says the chief executive of Saudi Telecom Company (STC) International.
Acquisitions and the exit of private-equity groups would result in a handful of telecoms operators holding more than 60 per cent of the regional subscriber base, said Ghassan Hasbani.
"The biggest share of the market in the region will be controlled by three to four groups in the next four years," said Mr Hasbani.
The largest companies in the Middle East are expected to control "more than 60 per cent of the subscriber base in the region", he added.
The forecast comes after a flurry of acquisitions and new-market entries by regional telecoms companies over recent years.
Mr Hasbani said he expected further consolidation, with the likely disappearance of single-market operators.
"Operators that work in only one market will face many difficulties in managing their costs," he said. "We have seen that trend in Europe: there are almost no single-market operators left in Europe."
Other trends include the expected withdrawal of private equity companies in the region, he added.
"There is a trend that we're seeing, which is the exit of private-equity groups holding these telecoms operators. It's either a complete exit or consolidation of ownership," he said. "This inevitably results in telecom operators coming in and consolidating the market."
Mr Hasbani cited the "continuous and renewed interest" by the Kharafi Group to exit its position in Zain.
STC predicts its revenue from overseas to grow from 30 per cent of overall revenue in 2009 to about half by 2014. "There would be some inorganic growth through acquisitions," he added. "We are always looking at potential opportunities, either greenfield or existing companies, in the Middle East region, and Asia and North Africa."
Philip Brazeau, who heads the telecoms practice at the Middle East law firm Al Tamimi, said he expected four operators - Etisalat, Zain, STC and Qtel - to increase their share of the market to 75 per cent of the regional subscriber base. "They're well on their way to that," he said.
"Consolidation is a natural course in the telecoms industry," Mr Brazeau said. "I've always maintained that STC has enough purchase power, and it has yet to make its mark known in the [mergers and acquisitions] space."
Mr Brazeau also said he expected one of the largest four regional operators to be bought out in the future. "I anticipate that one of them will likely disappear," he said.
(C) thenational.ae
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