In the span of a single week, the Middle East has become the centre of some of the telecommunications industry's largest acquisition deals.
Along with Etisalat's US$10.5 billion (Dh38.56bn) bid for a 46 per cent stake in Kuwait's Zain, the Russian mobile operator VimpelCom and the Egyptian billionaire Naguib Sawiris agreed to combine their telecomms assets, including about half of Orascom Telecom, for $6.8bn in stock and cash.
If both deals are completed, the landscape of the region's telecoms sector would be changed drastically. Etisalat and VimpelCom would become two giant regional operators able to generate greater revenues through their economies of scale and purchasing power. Developments in the industry were anticipated by both Mr Sawiris and Mohammed Omran, the chairman of Etisalat. Both executives shared a keynote panel address last February at the Mobile World Congress in Barcelona and offered differing views on the evolution of the telecoms sector. But as this past week's events have demonstrated, their views largely coincide.
Mr Sawiris noted how the telecoms industry would engage in a period of heavy consolidation, leaving only about five operators to run the global sector. Mr Omran's view was that to grow, an operator must expand its operations through acquisitions or licence purchases. Consolidation remained a hot topic yesterday at a telecoms conference in Dubai, since industry experts believe the sector is ripe for more acquisitions.
"As the industry matures … we will see changes in group portfolios that match better with their identities and enable them to make more money out of them," said Marc Aafjes, the director of corporate strategy and intelligence for Qatar Telecom. "If you look at consolidation and growth in the Middle East, it's still quite recent and there's still a lot of opportunities for new configurations." But Peter Kaliaropoulos, the chief executive of the Batelco Group, warned that while consolidation would centralise operations across a company, it would also slow down decision-making at the top.
"You really need to do your homework when it comes to a business case [in an acquisition]," Mr Kaliaropoulos said.
