Telecom sector to be most resilient in South Asia and Middle East

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Bangalore: The telecom sector has shown resilience both in South Asia and in the Middle East market in terms of revenue generated by operators and spending capacity. A recent study done by Frost & Sullivan on 'Telecom Companies Capital Expenditure' for South Asia and Middle East market reveals that the sector will see investments in developing markets like India, Sri Lanka and Bangladesh as well as in mature markets like the U.A.E and Saudi Arabia.

The study has also revealed that it is the Indian market which will dominate the region. The total spending in the Indian market was $21,553 million in 2008 and it is anticipated to grow at a CAGR (Compound Annual Growth Rate) of 2.2 percent till 2015 to reach $25,128 million. The capital expenditure (CAPEX) will be driven by 3G operations which will start in the next one or two years.

Girish Trivedi, Deputy Director, South Asia and Middle East, Frost & Sullivan states, "While fixed line services will have lesser investment, mobile services are anticipated to constitute major CAPEX in the South Asia and Middle East region. Technological advancements like 3G will continue to spur the spending pattern and investments in broadband and carrier networks and multimedia and value-added services will gain significant traction in these regions."

It is estimated that the total telecom spending in the Bangladesh market which was $1,744 million in 2008 will grow at a CAGR of around 2.4 percent between 2008 and 2015 to reach $2,060 million. However, the Bangladesh telecom market is plagued with taxation issues, and the introduction of SIM (Subscriber Identity Module) tax has adversely affected growth in the sector.

The total telecom spending in the U.A.E. market estimated by Frost & Sullivan at $1,263 million in 2008, is expected to decline with a negative CAGR of around 0.02 percent between 2008 and 2015 to reach $1,261 million. U.A.E. has deployed 3.5G HSDPA (High-Speed Downlink Packet Access) and 3.75G HSUPA (High-Speed Uplink Packet Access) networks. The country has one of the highest GDP (Gross Domestic product) per capita in the world and hence despite penetration levels being around 160 percent, ARPU (Average Revenue Per User) of the operators will continue to be high.

In Saudi Arabia, the entry of new operators has spurred spending in the market. The total telecom spending in this market is also expected to decline with a negative CAGR of around 1.59 percent between 2008 and 2015 to $5,875 million. The total spending in 2008 was $6,576 million. Broadband penetration is lowest in the region but this segment will constitute a major portion of CAPEX of the operators in the next three to four years.

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