The growth of the telecoms sector will be crucial to economic recovery in the Middle East but regional operators must raise their game to seize the opportunity, delegates were told at last week’s OMD Predicts 2009 conference in Dubai.
Mohammed Shakheel, a Gulf specialist within the London-based Economist Intelligence Unit, said that diversification away from oil would be key to the growth of regional economies. He identified telecoms and technology – alongside healthcare and pharmaceuticals, Islamic finance and low-carbon enterprise – as the sectors with the most potential.
Shakheel said Saudi Arabia, in particular, had shown a huge appetite for telecoms, quality consumer goods and technology. However, the biggest economic growth in the region in 2009 would be in Qatar (estimated at 9.5 per cent), followed by Iraq, Egypt and Libya. Negative growth, he said, would be concentrated in the GCC, with the UAE experiencing the biggest contraction.
The importance of telecoms was echoed by Charles Wright, managing partner of the recently-launched Dubai office of Wolff Olins. He said Etisalat, Zain and Orascom were all primed for expansion.
“These guys are really going for it,” said Wright. “They have said they want to be in the world’s top 10 ot 20 by next year. Okay, everyone has said that, but these companies can go east and west, and they have got $3bn to $4bn to spend. They are exploiting the weaknesses of western organisations to buy assets when they are cheap.”
However, such expansion could only be achieved, he suggested, by revolutionising brand strategy. He used his own experience of buying the iPhone as an example. In the UK, the device cost him Dhs1440 to buy, with a montly charge of Dhs210 and the deal done in one store visit. In the UAE, the device was Dhs2500, with a monthly charge of Dhs250, and after three store visits he still had unsolved problems.
“Most of the big operators in this region are not used to price competition in their markets but they will face that abroad, in other markets, from the likes of O2 and Vodafone. As soon as there is competition and choice, price becomes a factor, and also quality of service. Vodafone are competing with the big Indian bruisers with the slogan ‘Happy to help’. [The premise is that] what you do is more important than what you say, in any language.”
Wright highlighted the need for a general shift in the way Middle East brands define themselves – away from the business of selling products with limited choice, and instead towards a consumer-focused model which is more about choice, relevance, service and delivery.