Egypt’s recent politically motivated shutdown of its Internet and mobile services may hint at wider implications for operators and vendors seeking to invest in emerging markets.
Risks abound for players such as Vodafone, Blackberry and Google, which will have to be weighed against the opportunities for growth, said Ovum analyst Angel Dobardziev.
“The political risk has always been there in the Middle East, but when the risks are weighed against the growth potential, we think many investors with a longer term, strategic outlook will remain on the optimistic side,” Dobardziev told TelecomAsia.
He said the recent ban in Egypt could be viewed as an ‘acute reaction of a political establishment to an existential threat’ that would do little to affect the Middle Eastern telecoms landscape. “Digital communication is becoming so entrenched that any government attempts to suppress it are counter productive, and both governments and telcos increasingly recognize that fact.”
Dobardizev’s view is shared by Jake Saunders, VP for Forecasting at ABI Research. “There have been a number of flare ups from Tunisia to Egypt and potentially Jordan, but things will stabilize in the longer term,” Saunders told TelecomAsia.
Risks are part and parcel of investing in emerging markets, and political unrest need not be the only factor operators need worry about. “Out of the blue taxes and fines are also extremely unpleasant - it’s a minefield out there,” said Saunders, citing SingTel’s recent fine in Indonesia, and Vodafone Essar being hit by taxes in India.