The role of the telecommunications sector has undergone a fundamental transformation. No longer limited to providing connectivity and data speed, telecom operators now play a crucial role in shaping the digital landscape. This is particularly evident in the Middle East. In the region, numerous countries are fast-tracking digital transformation. And it positions telecom at the forefront of reshaping both the public and private sectors.
The Middle East telecom revolution
Over the past 25 years, the Middle East and Africa telecom industry has undergone significant evolution. With a few exceptions, many governments have liberalized their telecom industries, fostering steady growth in this sector. This expansion can be attributed to various factors. These include the establishment of efficient regulatory bodies and investing more in private companies.
According to Technavio’s projections, the Middle East telecom market is anticipated to reach $20.57 billion by 2026. Additionally, Mordor Intelligence forecasts a growth rate of 5.28 percent in the MEA telecom market until 2029.
Mordor Intelligence’s report characterizes the MEA telecom market as moderately consolidated. Key players include Saudi Telecom Company (stc), Etisalat Group, Ooredoo Group, Zain Group and Oman Telecommunications Company. These industry leaders have been expanding their global footprint and advancing digitalization.
What’s driving telecom growth in the region?
The rapid rise of mobile technology is a key factor contributing to heightened connectivity in the Middle East and the wider region. The region ranks among the “most mobile” globally. As reported by data.ai individuals in Saudi Arabia, on average, dedicated an impressive 5.5 hours per day to their mobile devices in 2022 alone.
The emergence of Mobile Virtual Network Operators has made the telecom landscape even more competitive. MVNOs offer specialized and often more affordable services that cater to specific market segments. This development has diversified the market and made mobile services more accessible to a broader range of consumers.
Along with the expansion of fiber-based networks, the adoption of 4G – and later 5G – has enabled faster and more reliable internet connections. It further drove the uptake of digital services, contributing to the overall growth of the telecom sector in the Middle East.
Looking ahead, Statista forecasts that 92 percent of all mobile connections in the Middle East and North Africa region will be through smartphones by 2030. This development is further echoed in the November 2023 Ericsson Mobility Report. It predicts that mobile subscriptions in MENA will increase from 740 million in 2023 to 850 million in 2029. This represents an annual growth rate of 2.4 percent. By 2029, 4G will make up 54 percent of these subscriptions. The report also forecasts that 5G will see the fastest growth, rising from 44 million subscriptions in 2023 to 350 million in 2029. By then, it will make up about 40 percent of all subscriptions.
“MENA is witnessing an accelerated digitalization journey, driven by strong governmental ambitions and an increasingly tech-savvy population in the region,” said Håkan Cervell, vice president and head of Saudi Arabia and Egypt at Ericsson MEA.
Instrumental in digital transformation
When the pandemic struck, telecom revenues in the Middle East only dipped by less than 1 percent. This highlights the sector’s resilience. Going forward, this robust market is poised to play a pivotal role in the public and private sectors’ digital transformation.
According to Strategy& Middle East, a part of the PwC network, the coming decade will see the advancement of cloud computing, blockchain and artificial intelligence. As traditional telecom reaches saturation, these services are expected to drive sustainable growth in the sector. As cited in the report, IDC expects that the cloud market in the Middle East will more than double, hitting $2.35 billion this year.
Strategy& identifies three key factors that make the Middle East telecom sector ideal for this role. The first is the large customer base, second is the availability of funds, and third is government support. For example, Saudi Arabia’s Public Investment Fund has a 70 stake in stc, while the UAE’s Emirates Investment Authority owns 60 percent of Etisalat. With substantial financial backing, telecom operators have the means to expand and offer such advanced services.
The sector’s growth further aligns with several Middle Eastern governments’ efforts to diversify and place technology at the core of their economic expansion. For example, the UAE, which ranks among the top 15 most digitally competitive countries globally, has initiatives like the UAE Strategy for Artificial Intelligence.
Meanwhile, stc has announced that it is investing $400 million to build the region’s biggest cloud-enabled data center. This is in line with the Saudi Vision 2030, wherein one of the objectives is to make the Kingdom a leading digital hub in the region.
Read: stc Group partners with iBASIS to boost IoT connectivity in MENA
Challenges remain
Indeed, governments in the Middle East strongly support and invest in digital technology and telecom infrastructure to boost the economy and improve people’s quality of life. And while the push for smart cities, e-governance and digital inclusion initiatives drives demand for advanced telecom services, it also brings critical issues like data privacy and cybersecurity to the forefront. The European Union’s General Data Protection Regulation could serve as a model for strengthening data protection laws in the region.
Governments and telecom operators must also prioritize better access and services to under-served or yet-to-be-served areas. Doing so can make the journey toward a digitally driven future more inclusive.
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