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GCC telecom firms redefining themselves as ‘techcos’, says report

Telecom firms in the region are expected to experience increased revenue growth by pushing more non-telecom offerings

GCC telecom firms redefining themselves as ‘techcos’, says report
[Source photo: Anvita Gupta/Fast Company Middle East]

The blend of telecommunication companies and technology is becoming more evident in the GCC region. As these telecom firms gain momentum in the region, they are set to reinvent themselves as technology firms, aiming to diversify their revenue streams.

This comes via S&P Global’s latest report, which noted that the likelihood and hopes for moderate growth with telecom operations are among the main drivers influencing the firms to redefine themselves as techcos. 

Techcos firms—defined as telecommunication companies that focus more on technology—provide connectivity through newer channels, such as cloud computing platforms, making integrating hardware, connectivity, and applications easier.

“Rated GCC telcos – including Beyon, e&, Ooredoo, and STC – aim to enhance their ‘techco’ services and have already expanded their non-telecom businesses over the past few years,” said the report. 

According to the report, telecommunication firms in the region provide various non-telecom services targeting B2B customers, such as cybersecurity, cloud services, the Internet of Things, AI, and data centers. 

“The GCC telcos we rate are typically major local players, operate in relatively favorable and stable regulatory environments and benefit from their leading market positions and well-invested asset base. Even so, they suffer from a decline in some core telecom services, including fixed voice telephone and messaging services,” said S&P Global. 

Telecom firms are also venturing into fintech offerings, which “capitalize on digitalization trends, tech-savvy young populations in the Middle East, and underbanking in emerging markets,” said S&P Global. 

The report further estimates non-telecom operations to currently contribute about 15% to 16% to rated GCC telcos’ combined revenues. 

“While core telecom services will continue to account for most revenues and remain the overwhelming profit generators in the short term, we expect digital businesses will grow significantly faster.” 

Telecommunication firms in the region will witness low, single-digit growth for telecom revenues, while non-telecom revenues will consist of organic growth of 10% to 20% per year. 

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