Telecom Firms in GCC Transforming into Tech Companies to Boost Revenue Streams
In a bold move, telecommunication companies in the Gulf Cooperation Council region are reshaping their identities as technology firms in order to expand their revenue streams, according to a report by S&P Global.
The report highlights that the moderate growth outlook for traditional telecom operations is compelling these firms to rebrand themselves as techcos.
Techcos, as defined in the report, are telecom companies that are shifting their focus towards technology. These companies are leveraging new channels such as cloud computing platforms to provide seamless integration of hardware, connectivity, and applications.
Techcos on the Rise in GCC
According to S&P Global, “techcos are gaining ground” in the region, with rated GCC telcos like Beyon, e&, Ooredoo, and stc expanding their non-telecom businesses in recent years to enhance their techco services.
Telecom firms in the region are now offering a wide range of non-telecom services targeting business-to-business customers, including cybersecurity, cloud services, Internet of Things, artificial intelligence, and data centers.
Diversification and Expansion Strategies
With mature telecom markets in the GCC region and limited growth opportunities in core telecom services, companies are exploring new avenues for growth. This includes offering fintech services for both B2B and B2C customers to capitalize on digitalization trends and underbanking in emerging markets.
Furthermore, telecommunication companies are venturing into media, entertainment, and e-gaming sectors to diversify their businesses. Recent acquisitions made by these firms, such as Saudi Telecommunications Co. securing stakes in systems integrator firms and e& acquiring Careem Super App, are examples of their expansion strategies.
Future Outlook
The digitalization and economic development agendas of GCC governments are expected to support digital businesses and drive consolidated revenues for telecommunication firms. While core telecom services will remain the primary revenue generators in the short term, digital businesses are projected to grow at a faster pace.
Overall, telecom companies in the region are forecasted to experience low single-digit growth in telecom revenues and organic growth of 10% to 20% annually in non-telecom revenues. Mergers and acquisitions in the non-telecom sector are anticipated to accelerate revenue growth from tech-related services.