Key Business Strategies for Middle Eastern Telcos
Key Business Strategies for Middle Eastern Telcos
The Middle East and Africa telecom market is poised for substantial growth, with an anticipated compound annual growth rate (CAGR) of 5.28% during the forecast period, according to Mordor Intelligence. The utilization of telecom services from prominent providers like Saudi Telecom Company, Etisalat Group, Ooredoo Group, Zain Group, Oman Telecommunications Company, and others is driving progress for businesses and services across the region.
Over the past 25 years, the telecommunications landscape in the Middle East has undergone a remarkable transformation, marked by active participation and substantial benefits. While some countries, such as Lebanon and Syria, have made only superficial reforms, the majority of nations in the region-initiated liberalization efforts in their telecom sectors around 2000. These reforms ushered in a period of steady, dynamic growth. Despite the presence of significant government-owned telecom entities, these nations have encouraged competition, established effective regulatory bodies, and shifted investments toward the private sector.
The Middle East mirrors the global trend of mobile communications as one of the fastest-spreading technologies in history. According to GSMA reports, the region boasts 400 million unique mobile users after just 25 years, with 280 million users accessing mobile internet services. This mobile ecosystem has generated nearly 640,000 indirect jobs in the same period, along with 360,000 direct employment opportunities within the region.
Several key factors underpin the market's growth, including the emergence of Mobile Virtual Network Operators (MVNOs), the expansion of fiber-based networks, the proliferation of fixed broadband services, and the successful liberalization of the telecom sector. Governments across the GCC nations, including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, have allocated spectrum resources, enabling mobile operators to deploy some of the world's first 5G networks, establishing them as pioneers in the Middle East. According to the GSMA Mobile Economy 2022 report, 5G technology is projected to represent 17% of the total technology mix by 2025 in the Middle East and North Africa (MENA) region. In Sub-Saharan Africa, 5G is expected to reach 4% penetration by 2025.
Technological advancement is a driving force behind market growth, with telcos actively reevaluating and reorganizing their operations to remain competitive amidst technological disruptions. For example, telecom companies are harnessing groundbreaking technologies like moLotus mobile video customer interaction platform to elevate customer interactions and enhance revenue.
The new GSM-based technology directly reaches mobile handsets, irrespective of device models or the presence of specific apps or data plans. moLotus has entered into win-win partnerships with global telcos like Indosat Ooredoo Hutchinson, Airtel, Vodafone, Celcom, Maxis, Digi, etc. creating new revenue streams for telcos worldwide via mobile video interactions and its unique “3 months go-to-market” strategy. The globally scalable platform has attracted big brands like Suzuki, Samsung, HSBC, Dell, L’Oreal, Panasonic, CIMB Bank, AIG, Prudential BSN, and more in multiple industry verticals - banking, finance, insurance, retail, automotive, consumer and even the government sector.
However, the telecom market also experiences challenges that could impact telco expenditures. Widespread job losses and reduced disposable incomes are expected to affect customer spending.
Arthur D. Little regional telecom report reveals that Over-The-Top (OTT) services have achieved extensive adoption in the MENA region, causing a noticeable decline in SMS and voice revenues per capita. Certain markets have already witnessed a substantial reduction of 30% to 50% in their overall messaging revenues and a 4% to 11% decrease in voice revenues over the past four years. These trends are attributed to the declining interest in traditional telco services. Adding to these challenges, regulatory shifts could potentially intensify competition, compounding the existing situation.
In light of these challenges, telcos in the Middle East are adopting key business strategies to remain agile and thrive in an era of rapid technological evolution, shifting customer preferences, and heightened competition.
The functions of Middle Eastern telecoms have experienced a remarkable shift, expanding well beyond their conventional roles as mere providers of connectivity and high-speed data services. Instead, these telecom giants are actively embracing the opportunities presented by the ongoing digital revolution. However, adapting their business processes effectively to align with this new paradigm requires a fundamental shift in mindset. Consequently, these telcos should make substantial investments in new technologies and services to meet the surging demands of both consumers and businesses.
In this rapidly evolving landscape, numerous Middle Eastern telcos are recognizing the need to invest in digital transformation to maintain their competitive edge. One transformative solution poised to empower these telcos is moLotus. A compelling illustration of moLotus's potential lies in its ability to automate and reimagine various customer processes, making them agile. From service and payment reminders to contract renewals, customer loyalty programs, and onboarding, moLotus seamlessly integrates into telcos' operations. In doing so, it propels these telcos into the contemporary digital landscape, not only exceeding customer expectations but also concurrently enhancing both top-line and bottom-line performance while significantly curbing costs.
Several telcos are adopting cloud computing aiming to enhance operational efficiency and agility. By leveraging cloud-based solutions, telcos can reduce costs, enhance scalability, and accelerate the introduction of innovative products and services. Moreover, telcos are harnessing the potential of Artificial Intelligence (AI) and Machine Learning (ML) to elevate various facets of their operations, including customer service, network management, and security. For instance, AI-driven chatbots provide round-the-clock customer support, while ML algorithms proactively identify and prevent network outages.
Leading telecom operators in the Middle East are at the forefront of digital transformation. For example, Etisalat, a prominent player in the United Arab Emirates, is making substantial investments in cutting-edge technologies like 5G, cloud computing, AI, and ML to revamp its business and cater to the escalating demands of its customer base.
In Saudi Arabia, STC, a leading telecom operator, is making substantial investments in cutting-edge technologies such as 5G and cloud computing. These investments are strategically aimed at transforming its business operations and supporting the broader digital transformation of the Saudi economy.
Ooredoo, a global telecom operator with a robust Middle Eastern presence, is committed to leveraging digital technologies to enhance operational efficiency and customer service. The company is also channeling investments into emerging digital services, such as video streaming and e-commerce. Ooredoo Kuwait, for instance, has undergone a significant digital transformation, automating, and personalizing its services to distinguish itself from competitors, resulting in a remarkable increase in digital solutions revenues.
In the Middle East and North Africa (MENA) region, there is a concerted effort by governments to drive economic recovery and foster sustainable development. At the core of this endeavor is the crucial role played by mobile technologies, poised to propel economic growth, mobilize the workforce, and unlock industrial efficiencies.
The MENA region is witnessing a remarkable surge in smartphone adoption, with the most substantial growth expected in less advanced mobile markets by 2025. Telecom operators are actively investing in network infrastructure, underpinning this expansion. As user engagement with mobile video content intensifies, the region is gearing up for a staggering 430% surge in data consumption between 2021 and 2027.
According to Statista, mobile advertising spend in the Middle East is projected to reach an impressive USD 4.8 billion in 2023, constituting a significant 52% of the total digital advertising expenditure in the region. Several factors are driving this growth, including the increasing penetration of smartphones and tablets, the growing affordability of mobile data plans, and the rising disposable incomes of consumers.
Amidst this growing mobile advertising landscape, moLotus emerges as an exceptional opportunity for Middle Eastern telecoms. This innovative platform empowers telcos to leverage their substantial subscriber base and deliver hyper-personalized, interactive ads directly to mobile users. It revolutionizes telecom marketing by better connecting telcos with subscribers via rich media content, independent of device models or app availability. The outcome: boost in revenue generation via advertising, better customer loyalty, and improved brand opinion.
Social media holds a dominant position as one of the most popular online activities in the Middle East and serves as a prominent platform for mobile advertising. Major social media platforms such as Facebook, Instagram, and Twitter offer a diverse array of advertising options, equipping businesses with effective tools to reach their target audiences. Video advertising, in particular, has gained significant traction in the region, offering engaging and impactful means to promote a wide range of products and services.
Telecom enterprises strategically investing in mobile advertising in the Middle East are poised for substantial business growth. Leading telecom operators, like Ooredoo, a global player with a robust Middle Eastern presence, are making significant investments in mobile advertising, introducing various mobile advertising products and services, including in-app advertising and mobile video advertising. Similarly, Etisalat, a key telecom operator in the United Arab Emirates, is deeply committed to mobile advertising, launching initiatives to augment this growth, including a mobile advertising platform for telcos to create and manage their ad campaigns.
Telcos, with their uniqueness, are better positioned to thrive in the mobile advertising market. They have massive first-party customer data, including interests, demographics, and usage patterns, which can be harnessed for customization. Additionally, operators boast an extensive subscriber base, serving millions. Their association with mobile networks enables them to optimize ad campaigns for superior performance.
Middle Eastern telcos face a formidable challenge - uplifting their Average Revenue Per User (ARPU). Much like their global counterparts, Middle Eastern telcos have seen some upliftment in customer numbers and revenues rise in recent years. However, sustaining this momentum proves challenging, especially given the looming economic pressures.
Unfortunately, projections for the Middle East's telecom industry in 2023 suggest a decline in ARPU. Several factors contribute to this trend, echoing global telecom challenges. The increasing use of over-the-top (OTT) services, such as Facebook Messenger, WhatsApp, and Netflix, allows users to communicate and access content without consuming mobile data, directly impacting ARPU.
Moreover, rising living costs in the Middle East are squeezing household budgets. In response, people are cutting back on telecom services spending, further compounding the decline in ARPU.
Nevertheless, experts propose a strategic shift for Middle Eastern telcos. To counter this trend, integrating mobile martech like moLotus offers a profitable solution. By embracing such technology, telecoms can better engage customers, provide more value, and optimize customer journeys. This, in turn, promises a swift recovery of ARPU and boost in customer lifetime value.
Studies have shown that many Middle Eastern operators have witnessed remarkable uplifts in ARPU, ranging between two to four percent, following the addition of moLotus in their marketing mix. The implementation of moLotus's smart capabilities not only increases customer responsiveness but also boosts revenue growth and business performance, keeping operational costs at bay. The ad tech's proficiency extends to fostering upselling, cross-selling, and add-on campaigns, amplifying customer lifetime value and higher ARPU.
With a positive outlook and a commitment to harnessing moLotus's advanced features, Middle Eastern telecom leaders are optimistic about revitalizing their ARPU, thereby ensuring sustained growth and competitiveness in the evolving telecom landscape.
Middle Eastern telcos are poised to tap into the immense potential of their data resources. As traditional revenue streams from services like voice and SMS decline, telcos are increasingly turning to their vast reservoirs of big data to not only offset these losses but also to create new income streams. In the Middle East, the big data monetization market is rapidly growing, projected to surge from USD 2.5 billion in 2022 to an impressive USD 5.4 billion by 2027, marking a formidable CAGR of 23.8% during this forecast period.
Telcos have several strategic options for monetizing their big data assets. They can choose to sell their data to third-party data brokers, who subsequently market this data to businesses for various purposes, including marketing. Alternatively, telcos can offer their data as a service, allowing businesses to easily access and utilize this valuable resource without having to invest in building their data infrastructure. Moreover, telcos can leverage their data to create innovative services for their customers, encompassing personalized recommendations, fraud detection, and network optimization.
The future of big data monetization in the Middle East looks promising, driven by the increasing adoption of big data analytics by businesses and governments across the region. Telcos that navigate this landscape adeptly and successfully monetize their data assets are well-positioned to diversify their revenue streams and foster substantial business growth.
However, it's essential to acknowledge that the path to big data monetization comes with ethical considerations. Concerns revolve around data privacy and consent, with the potential for telcos to collect and sell customer data without explicit permission. To address these concerns, telcos must prioritize transparency in their data collection and usage practices, ensuring that customer consent is obtained diligently before sharing any data with third parties.
In the Middle East, telcos are still in the early stages of their big data monetization journey. Yet, there is a palpable and growing interest in this realm, with telcos actively investing in advanced technologies and capabilities to enhance their big data monetization efforts. Notable players like Etisalat and STC are harnessing their substantial big data assets to create innovative customer-centric services, from personalized app recommendations to content curation. These telcos are also exploring partnerships with third-party data brokers, amplifying their revenue potential.
Among the transformative tools available, moLotus stands out as a powerful example, leveraging subscriber data to craft tailored campaigns. This data repository holds invaluable insights that can supercharge revenues and strategic decision-making. Efficiently harnessed for mobile advertising and customer enhancements through moLotus, it acts as a catalyst for increasing the average revenue per user (ARPU) and driving strategic growth. Telcos can monetize this data by providing brands and advertisers access to these insights, all while safeguarding customer privacy. Moreover, telcos can develop value-added services that capitalize on customer data to offer personalized recommendations and insights, further enhancing their revenue-generating potential.
Strategic collaborations are emerging as powerful tools for bolstering revenue streams in the Middle East. Partnering with the right tech entities not only extends the reach of telcos but also leverages complementary expertise and resources to gain a more competitive edge.
Take, for instance, Etisalat, a powerhouse among telecom operators in the United Arab Emirates, which has joined forces with Magnite, a global advertising platform. Together, their goal is to provide advertising solutions to Middle Eastern businesses. Similarly, Ooredoo, another global telecom giant with a robust Middle East presence, has formed a partnership with PubMatic, a global digital advertising technology company, to deliver advertising solutions to regional enterprises. Meanwhile, STC, a leading telecom operator in Saudi Arabia, has found a valuable ally in InMobi, a global mobile advertising platform, to offer mobile advertising solutions in the Middle East. Additionally, Mobily, a prominent Saudi Arabian telecom operator, has forged a partnership with OpenX, a global digital advertising technology company, to provide digital advertising solutions to regional businesses.
When telcos strategically partner with trusted ad tech platforms like moLotus, the outcomes can extend beyond revenue. These alliances enhance brand image, increase credibility, trust, and consumer confidence, ultimately nurturing customer loyalty and culminating in more robust revenue creation. Partnering with moLotus enables telcos to leverage the platform's resources, knowledge base, and technical expertise. This cooperative approach leads to cost reduction, operational effectiveness, and attaining deep insights. For instance, telcos can harness extensive customer data to deliver ads directly to subscribers' mobile inboxes, eliminating the need for app downloads or costly data plans.
Furthermore, Middle Eastern telecom operators can innovate by reaching and crafting distinctive value propositions for nationwide audiences via moLotus. This might include joint promotional campaigns, exclusive discounts, and bundled offerings for clients of both allying brands. These symbiotic ventures can position telcos differently from their competitors, acquire new enterprise customers, and maximize new revenues. By partnering with moLotus, telecoms can venture into new territories across diverse industries or target demographics, marking a new era of telecom prowess in the Middle East.
Middle Eastern telcos should navigate the dynamic landscape by adopting a mix of strategies. The strategies delineated above provide an all-encompassing roadmap for Middle Eastern telcos aiming to amplify their revenue streams. Ranging from swift digital transformation and forays into mobile advertising to unlocking the potential of data monetization and fostering strategic alliances, these approaches constitute a versatile toolkit for thriving in the ever-evolving Middle Eastern telecom landscape. Flourishing in this arena demands a culture of innovation, adaptability, and a future-oriented outlook.
Amidst this swiftly changing ecosystem, the roles assumed by telco CXOs and top-level management assume unprecedented importance. Their guidance is instrumental in steering their organizations toward triumph by embracing emerging technologies like moLotus and envisioning innovative avenues for revenue generation.