The UAE's technology conglomerate e& is projected to lead revenue growth in the GCC telecoms sector next year as companies shore up their assets in new international markets, a study has found.
By acquiring assets in new regions and offering products and services there, telcos are expected to increase their annual revenue by an average of 3 per cent in 2023-2024, Moody's Investors Service said in its latest update.
Next year, however, e&'s revenue will have much higher growth of about 20 per cent "because of consolidation of the PPF Telecom assets", Moody's said.
The company, through its e& international arm, is currently focused on closing the deal to acquire a majority stake in PPF Group, e& international chief executive Mikhail Gerchuk told The National in a recent interview.
This will give it a controlling stake in the Czech company's operations in Bulgaria, Hungary, Serbia and Slovakia, amid a push to expand into central and eastern European markets.
The PPF deal is in addition to the 14.6 per cent e& has acquired in Vodafone, consolidating its shareholding in the British company.
STC, Ooredoo and Omantel, on the other hand, would increase their 2024 revenue by about 5 per cent, 3 per cent and 2 per cent, respectively, Moody's said.
Riyadh-based STC in September acquired a 9.9 per cent stake in Spain's Telefonica, while its tower subsidiary Tawal completed its $1.33 billion acquisition of Netherland-based United Group’s telecoms assets in August.
Omantel's revenue growth, meanwhile, is projected to be low because expansion efforts in its other business units are to be offset by lacklustre performance from its core market, where it faces fierce competition, Moody's said.
The UAE's other telecoms company, Emirates Integrated Telecommunications Company, the Dubai operator known as du, currently has no plans for overseas expansion or acquisitions.
Investing in overseas markets could support credit in the long term, but the benefits from these acquisitions will still depend on the balance between the maturity and growth potential of new geographies, Mikhail Shipilov, assistant vice president-analyst at New York-based Moody’s, wrote in the report.
"Previous investments in African and Asian enterprises have so far demonstrated mixed results because of currency and macroeconomic volatility and the sometimes unpredictable legal and regulatory environment in some regions," he said.
"Therefore, GCC operators are currently trying to strike a balance between more stable operating environments and some potential for growth in telecommunications markets."
The telecoms industry is going through a major transformation with the advent of new innovations.
That has prompted companies to adapt innovative technology to streamline and optimise their operations, allowing them to expand consumer base and add new revenue lines as competition intensifies.
For GCC telcos, strong macroeconomic environments in domestic markets have enabled them to be financially strong, allowing them to step up activity after a number of "quiet" years, Moody's said.
"Now, they are eager to deploy their significant resources, diversify from oil-dependent or emerging market economies, increase their buyer power over vendors and preserve growth in consolidated revenue and earnings," it said.
Telcos in the GCC would also benefit from boosting their investment in digital technology and information and communication technology as it would drive diversification and growth, Moody's said.
Their willingness to offload non-core assets would also support the efficient use of their capital, the report said.
Indeed, they have made moves: e& has invested in a number of digital ventures in the GCC, while STC and Omantel have been scaling up their ICT capabilities.
Ooredoo, meanwhile, had announced the sale of its Myanmar business and merged its Indonesian operations with CK Hutchison to create the country's second-biggest operator.
"However, the changing revenue mix and upfront costs temporarily pose a risk to profitability margins. Execution and integration risks are also present," Moody's said.
"Robust balance sheets and lower capital spending intensity provide sufficient dry powder for M&A ... despite their acquisitive appetite, the companies should sustain their credit metrics within the ranges for the current ratings, sizing their investments accordingly."
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Thanksgiving meals to try
World Cut Steakhouse, Habtoor Palace Hotel, Dubai. On Thursday evening, head chef Diego Solis will be serving a high-end sounding four-course meal that features chestnut veloute with smoked duck breast, turkey roulade accompanied by winter vegetables and foie gras and pecan pie, cranberry compote and popcorn ice cream.
Jones the Grocer, various locations across the UAE. Jones’s take-home holiday menu delivers on the favourites: whole roast turkeys, an array of accompaniments (duck fat roast potatoes, sausages wrapped in beef bacon, honey-glazed parsnips and carrots) and more, as well as festive food platters, canapes and both apple and pumpkin pies.
Ruth’s Chris Steakhouse, The Address Hotel, Dubai. This New Orleans-style restaurant is keen to take the stress out of entertaining, so until December 25 you can order a full seasonal meal from its Takeaway Turkey Feast menu, which features turkey, homemade gravy and a selection of sides – think green beans with almond flakes, roasted Brussels sprouts, sweet potato casserole and bread stuffing – to pick up and eat at home.
The Mattar Farm Kitchen, Dubai. From now until Christmas, Hattem Mattar and his team will be producing game- changing smoked turkeys that you can enjoy at home over the festive period.
Nolu’s, The Galleria Mall, Maryah Island Abu Dhabi. With much of the menu focused on a California inspired “farm to table” approach (with Afghani influence), it only seems right that Nolu’s will be serving their take on the Thanksgiving spread, with a brunch at the Downtown location from 12pm to 4pm on Friday.
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Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
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