Telecoms sector hots up in Middle East

The Middle East telecoms and technology markets are currently attracting the attention of the world’s leading lawyers.

Each of the key jurisdictions in the region is providing a wealth of IT and telecoms-related matters for the top firms, primarily from the world’s leading US and UK law firms. The levels of activity are reminiscent of the days of the dotcom boom and have lawyers in the sector racking up the air miles.

Of course, the Middle East is a regional growth story across the board and not one in any way confined to telecoms – Dubai, for example, is the most concentrated area of construction activity on the planet.

But the boom in telecoms activity, coupled with the levels of investment in the Middle East, is making the region a technology, media and telecoms (TMT) hotspot.

Bahrain, for example, is currently the fastest-growing economy in the Arab world (United Nations Economic and Social Commission for Western Asia, January 2006). A 2002 telecoms law paved the way for the liberalisation of the telecoms sector and will end the monopoly held by the Bahrain Telecommunications Company (Batelco).

There are two mobile licences currently granted to MTC Vodafone (Bahrain) and Batelco. However, the exclusivity period for these operators ended in April 2005 and the Telecommunications Regulatory Authority is investigating whether it would be appropriate to grant a third licence.

In the United Arab Emirates (UAE), the majority state-owned Emirates Telecommunications Corporation (Etisalat) runs the national and international fixed-line network, mobile telephony, internet access and cable TV services. However, its monopoly was cancelled due to World Trade Organisation requirements, and a second telecoms operator, licensed earlier this year, is about to enter the market. Elsewhere, the UAE’s second fixed and mobile telecoms operator, EITC, recently floated. The deal, which was led by Simmons & Simmons, was heavily oversubscribed.

According to Tim Schwarz, head of the TMT practice at Linklaters, it is cash-rich Middle East telecoms businesses such as Etisalat, Mobile Telecommunications Company and Saudi Oger that are “taking the global telecoms sector by storm”. The next step will be to see how successful this new breed of telecoms company will be in rolling out from the Middle East region to take on the biggest companies in the world. Do not bet against them.