Middle East telecoms firms to save $2bn a year

Telecoms companies across the Middle East could save $2 billion a year according to a new report by a global consultancy.

The largest Middle East telecommunications operators are losing US$2 billion (Dh7.3bn) annually due to inefficiencies in their operating practices, according to a report issued today.

The study by global business advisory AlixPartners found that the leading telecoms companies in the wider Emerging Europe, Middle East and Africa (EEMEA) region could make annual savings of up to US$8bn if they implemented better procurement of goods and services.

"If you just look at the operators... in the Middle East, you'd be talking closer to a $2bn figure," said Nnenna Ilomechina, a director at AlixPartners in Dubai.

The report pointed towards savings in the procurement of handsets and SIM cards, services such as distribution and marketing, and roaming costs as areas where regional telecoms companies could make savings.

The AlixPartners 2010 Global Telecommunications Outlook analysed 155 global telecommunications service providers, with revenues totalling $1.65 trillion. The EEMEA part of the study analysed the top 13 operators in the region, which had total revenues of $83 billion.

The firm did not name specific operators in its initial findings.

A separate report issued in September founds that GCC telecoms operators could achieve cost savings of up to 30 per cent if they improved efficiencies and outsourced certain services.

The Boston Consulting Group (BCG) study cited inefficiencies including overproduction, high inventories and the overuse of resources.

"Telecommunications is still one of the most inefficient industries, with as much as 30 percent of its cost basis eaten up by waste. This waste is difficult to see because it is embedded in telecom processes", Joerg Hildebrandt, partner and managing director at BCG Middle East, said at the time.