The reporting of second quarter financials at the end of July offered a poignant and timely insight into the state of the telco industry in the Middle East. Etisalat, Ooredoo, and Zain reported a 40 per cent, 39 per cent, and 38 per cent slump respectively in their second quarter 2015 net profits to end June, prompting Comm. to review the reasons for these drastic declines in profitability and check whether they reflect wider factors currently dogging the regional sector

A number of operators in the Middle East reported declining profitability for the second quarter of 2015

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Batelco posted a 27.5 per cent rise in second-quarter profit, reporting a net profit of BD13.31 million (US$35.29 million) in three months to June 30.

The telco’s second-quarter revenue was BD92.1 million dinars, down five per cent year-on-year.

The company made a half-year net profit of BD27.54 million, up from BD24.90 million in the corresponding period of 2014.

Zain Group announced its third foray in the field of venture capital investment through a strategic participation in Luxembourg-based Digital East Fund that is managed by venture capital specialist Earlybird.  The fund has raised US$150 million since its inception in 2013 and invests in early-stage and growth-stage digital companies in Central and Eastern Europe, as well as in Turkey. Investors in this particular fund include the World Bank’s International Finance Corporation (IFC), and the European Research and Development Bank (EBRD), as well as a number of prominent family offices and entrepreneurs from the region.

Earlybird was founded in 1997 and has raised in excess of US$800 million to date spread over four funds that have invested in over 100 small to medium early-stage technology based entities across Europe and the Middle East.  The firm has offices and presence across the globe including in Luxembourg, Berlin, Munich, Istanbul, London, and Silicon Valley.

The four venture capital funds that Earlybird currently manages have all had a successful and proven investment approach in a variety of sectors including consumer Internet, enterprise software and services, as well as in medical technology. Impressively, the Earlybird management team’s track record of profitable exits includes 20 initial public offerings and trade sales since 2004.

The investment in the Digital East Fund is the third venture capital announcement in recent months by Zain, further building on the establishment of the Zain Digital Frontier and Innovation (ZDFI) business unit in 2014, which is charged with launching Zain into the digital space with the view to growing the company through the development of new innovative business streams that add to the company’s valuation and customer service offerings.  ZDFI focuses on the areas of innovation; digital services; corporate venturing; and smart cities.

Ooredoo Oman has acquired additional LTE (4G) spectrum, at a cost of OMR9.6 million (US$25 million), which will significantly boost its 4G network capabilities. The company reports that the 800/2600 spectrum acquisition is funded out of its operating cashflow and will bring better indoor coverage to customers as well as significantly faster download speeds for those wanting to access mobile data.

Ooredoo has already showcased its 4.5G technology at the Salalah Festival this year, where speeds of up to 200 Mbps were demonstrated.

Vodafone Qatar today announced its financial results for the three months ended 30 June 2015.

The operator reported 1.42 million mobile customers; up five per cent year-on-year. Total revenue for the period amounted to QAR538 million (US$148 million); down eight per cent. ARPU stood at QAR111 for the period, while EBITDA reached QAR110 million; down 31 per cent year-on-year.

Net loss of QAR100 million was reported, ballooning over 270 per cent from the QAR27 million reported during the same period a year earlier.