Saudi Telecom Company expects to win a bid for a mobile operating licence in Syria, despite a delay in the auction process because of anti-government protests there.
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Analysts say the Syrian mobile market has strong growth potential, but an auction of its third mobile licence has been held up by political unrest.
Saud al Daweesh, the chief executive of Saudi Telecom , also known as STC, said the company was still pursuing the licence and was confident of success.
"We will win," Mr al Daweesh said. "Of course we are interested, we are very much interested."
STC had not received a reply from Syrian authorities regarding a decision on the licence.
"We are waiting for their answers," he said.
Syria was a good strategic fit with other markets in which STC operated, such as Turkey and the Gulf, Mr al Daweesh said. "Syria was identified by our board as strategic for STC to expand [in] the Middle East".
STC and its rival Qatar Telecom are the only major companies left in the running for the licence, after others including Etisalat, France Telecom and Turkcell pulled out.
Some operators cited concerns over a 25 per cent revenue share demanded by Syria, although STC feels there is potential there, given the relatively low use of mobile phones in the country at present.
Meanwhile, STC plans to invest more than $1 billion (Dh3.67bn) this year in infrastructure across its global operations, with a focus on its Indonesia business.
"STC plans to invest around $450 million on the Indonesian operations," Ghassan Hasbani, STC's chief executive of international operations, told Zawya Dow Jones. "We're focusing on infrastructure. This will be done through debt and shareholder loans."
STC faces new competition in its domestic fixed-line business from Saudi Integrated Telecom, which has recently undertaken an initial public offering.
Mr al Daweesh said the rivalry was healthy.
"I think it will be very good for the market," he said. "This licence was given three years ago, it's nothing new. Everyone has had it in [their] strategy. "It will enhance the market, it will expand and grow the demand."
The STC executives were speaking on the sidelines of the TMT Finance and Investment Middle East conference in Dubai, where industry consolidation and mergers and acquisitions were on the agenda.
Mr al Daweesh said STC was open to acquisitions in the Middle East and North Africa and beyond. "We are scanning any opportunity that fits within the portfolio.
We've always announced our interest in the Middle East, South East Asia and North Africa."
bflanagan@thenational.ae
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Started: 2020
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Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Company profile
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”