Telcos become “techos” in strategic shift for GCC telecom providers

GCC telcos want to rebrand themselves as growth slows: GCC telcos are rebranding as “techos” (doesn’t exactly roll off the tongue, does it?) in a shift towards more digital-focused revenue streams, S&P said in a recent report. With mobile penetration rates already high at 130%-210%, growth is slowing: Core revenues are expected to increase a modest 1-3% between this year and the next.

Enter digital services: GCC government’s digital agendas to boost the telecom sectors’ revenues, stimulating the e-commerce, fintech, streaming, and gaming sectors. Non-telecom sectors could contribute 18%-25% to telcos’ revenues over the next three years — and increasing M&A activity could spur growth further.

Background: Etisalat rebranded as e& in 2022, spinning off its telecom operations from its other tech businesses. Bahrain Telecommunications also launched four digital ventures during the same year, rebranding to Beyon, while Qatar’s Ooreedoo spun off its fintech arm, Ooreedoo Money as a standalone company and carved out its data center unit.

Competition and margin volatility will remain, S&P Global says: GCC telecoms benefit from regulations and government relationships, but face competition from smaller players and global tech giants. However, they can collaborate with these giants and leverage local regulations favoring domestic data storage, while acting as integrators or building data centers as local partners for hyperscalers.

THE MARKET THIS MORNING-

It looks a lot like the start of most trading day before the Fed speaks: Asian shares are mixed slipped at the opening bell and have since made up their losses, with all four major benchmarks we track (the Nikkei, Hang Seng, Shanghai Composite, and Kospi) in the green at dispatch time. US and European futures were down slightly at dispatch time this morning as traders wait to for the Federal Open Markets Committee to wrap up its two-day meeting.

THE CLOSING BELL: TADAWUL-

The TASI rose 0.3% yesterday on turnover of SAR 9.9 bn. The index is up 7% YTD.

In the green: Chubb (+8.7%), Fitness Time (+8%) and Sisco Saudi REIT (+8%).

In the red: Alkhorayef Water & Power (-9.3%), AlBaha (-6.7%) and AlDawaa (-6.6%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.2% yesterday on turnover of SAR 25.4 mn. The index is up 10.7% YTD.

In the green: Mobi Industry (+14%), Knowledge Net (+6.9%) and Leen Alkhair (+6.6%).

In the red: Mulkia (-8.5%), Al Qemam (-6%) and United Mining (-5.2%)

CORPORATE ACTIONS-

#1- General Gulf Cooperative’s BoD has recommended a SAR 300 mn capital hike by way of rights issue, as the company pushes ahead with its expansion plan, it said in a filing to Tadawul. The move — which is still subject to regulatory approval — would also help the company boost its solvency and investment portfolio. No further details were provided.

#2- SNB Capital has distributed a SAR 34 mn dividend payout at SAR 0.25 a unit to AlAhli REIT Fund’s unitholders, it said in a disclosure to Tadawul.

#3- Saudi Arabian Refineries (Sarco) BoD has recommended withholding dividends for 2023 to allocate available funds towards new projects in a bid to bolster the company’s financial position, it said in a disclosure to Tadawul yesterday. Sarco’s general assembly is set to vote on the recommendation at the company’s next general assembly after obtaining necessary regulatory approvals.

#4- Dammam-based pipe maker Amiantit raised some SAR 70 mn in a rump offering that was 556.15% oversubscribed, it said in a disclosure to Tadawul yesterday. Trading on some 2.8 mn remaining shares from a rights issue last month ran last week. The rights issue came as the company aimed to raise its total capital by 4x or so to SAR 445.5 to help pay down debt and boost the company’s liquidity.