S&P: Gulf Telecom Companies Turn to Global Markets in Search of New Growth Opportunities and Revenue Diversification

A report issued by the international rating agency S&P stated that telecom companies in the Gulf countries are experiencing saturation in their mature domestic markets, with mobile phone penetration rates exceeding 100%. This has prompted these companies to expand outside their local markets to diversify their revenue sources.

The report indicated that over the past 12 to 18 months, Saudi Arabia’s stc and the UAE’s e& have announced significant expansions in their core telecom activities, particularly in the European market. These investments are expected to take the form of additional acquisitions alongside financial investments.

At the same time, telecom companies in the Gulf continue to invest heavily in sectors not directly related to telecoms, most notably cybersecurity, cloud services, the Internet of Things, artificial intelligence, data centers, and licensed digital banks or e-wallets. The report expects capital expenditure to remain relatively high, ranging between 14% and 16% of the total revenues of the classified Gulf telecom companies. Debt levels are expected to remain low for these companies, noting that E&’s profit margin will be limited by the recent transactions, but is expected to gradually improve to less than 1.5x by 2026.