With a recession on the cards, there is no better time than now for enterprises to harness the value of Web 2.0 in their business by capturing innovation, collaboration and social engagement, asserts Brian Armstrong, BT’s general manager for Turkey, Middle East and Africa 

Not so long ago, Web 2.0 was the new kid on the consumer technology block, and people were excitedly speculating about its potential in business. Right now, the economic climate makes excited speculation about the potential of anything a pretty rare commodity. There is an argument, however, that a downturn or recession is precisely the climate in which Web 2.0 tools will prove their worth. The key question to examine is what hidden value they can liberate from organisations during a downturn. We believe that Web 2.0 provides a route to business efficiency – and therein lies its potential as a key to unlock value.

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With value and confidence around the world going into what appears to be chronic decline at the moment, it is hard to see where board room optimism might exist in any business. However, whilst there is no doubt that the regional telecom sector has, and is being impacted to some degree, it is perhaps not all bad news; and the next 12-18 months promises some interesting prospects.

Abdullah Mutawi is partner and head of telecom at Trowers & Hamlins, Bahrain

It is of course true that some of the big regional operators have recently announced substantial drops in their 2008 fourth quarter net profits including STC (62 per cent), Wataniya (33 per cent), and Etisalat (20 per cent). In other quarters, M&A deals have visibly failed to come to market or to close including the privatisations of Batelco, Algerie Telecom and the sale of a strategic minority stake in Omantel. Orascom recently announced a share buy-back plan that has helped to shore up its flagging market value. In other cases, licences have recently been acquired at bargain prices with mobile licences in Bahrain and Iran for example being won for a fraction of the types of valuations that were common in recent years.

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The promising growth in M-commerce services is strongly driven by the latent need for banking solutions for those unaddressed by the financial sector thus far. Most banks have traditionally focused on the high-end customer segment, limiting themselves to a small proportion of developing countries’ population.

This feature is an extract from a Delta Partners whitepaper authored by partner Javier Alvarez, principal Bart Janssen, associate Guido Arons and the Delta Partners Intelligence Unit

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Analysts at Morgan Stanley remain bullish about telecoms stocks in the EMEA, believing a combination of well-entrenched positions, low penetration levels and pent up demand for telecoms services will help operators maintain strong operational and financial positions. However, research analysts at the investment bank identify Zain and Maroc Telecom as operators exposed to factors such as significant growth of competition in their markets, and of execution risk across a diversified portfolio, therefore predicting limited upside to these stocks’ performance

For now, analysts at  Morgan Stanley believe 2009 looks like another year of uncertainty. The investment bank’s global emerging market economists have lowered their growth forecasts for 2009 four times in the last six months to 3.1 per cent from 6.6 per cent. And while it is forecast that the telecoms sector in the EMEA region is likely to be impacted by the global economic slowdown, Morgan Stanley views telecoms as defensive and continues to recommend investors take an overweight position in EMEA telecoms, particularly through H109 and in the context of other emerging market sectors.

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While 2008 was a horrible year for most communications, technology, and media (CMT) firms worldwide, many Middle East and Africa players – including Etisalat and Orascom –demonstrated above average performance in Oliver Wyman’s Shareholder Performance Index (SPI). Among all regions, the Middle East and Africa, along with Latin America, posted the highest SPI – both with a regional average of 203, almost twice the CMT total average of 107. The calculation of the SPI, which is based on a five-year moving “window” of data, enables consistent comparison of shareholder returns by adjusting for the volatility of returns, differences in local interest rates, and mergers and acquisitions.

Milan Sallaba is Dubai-based partner of Oliver Wyman

CMT firms around the globe collectively shed US$3.1 trillion in market value in 2008, a 43 per cent drop from US$7.3 trillion to US$4.2 trillion – erasing all the gains that had been made since 2003, according to Oliver Wyman.

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