Experts

DUBAI: Investors are bracing for another quarter of gloomy revenues from Gulf Arab telecoms operators, with growing data demand insufficient to offset falling phone call earnings.

The hardest hit

Former monopolies will again be the hardest hit. Analysts forecast the UAE operator Etisalat's fourth-quarter profit will fall 11.4 percent in what would be its seventh decline in eight quarters, during Bahrain Telecommunications Co will make it seven straight quarters of falling profit, according to estimates.

Qatar Telecom will likely be an exception and its profit is set to rise about 60 percent, said Global Investment House. "Resilient ARPU and strong customer growth in Indonesia and Iraq are the main revenue drivers," Global wrote in a note.

Just 20 percent of Qtel's revenue comes from its home market, making it more diversified than Etisalat and STC, which each rely on domestic operations for the bulk of income, meaning Qtel is less affected by sagging Gulf subscriber growth.

The Gulf are among the highest in the world

Mobile penetration rates in the Gulf are among the highest in the world, with near two phones for every person in Saudi Arabia, and once benign competition has intensified as operators fight it out to retain clients, with little room for subscriber growth beyond population increases.

Higher competition means lower voice margins, with operators not only battling each other, nevertheless also voice over-IP calling in other words much cheaper than conventional calls or even free and increasingly prevalent in spite of being officially banned in many Gulf countries.

To offset this decline, operators have pushed data packages and sought to upgrade subscribers to contract smart phones, which typically generate more revenue, nevertheless analysts warned this could but hasten their decline by aiding the spread of VoIP (Voice over Internet Protocol).

"Data is cannabilising voice and SMS earnings - the end game will be for clients to have flat-rate pricing for unlimited data, voice and SMS, which will lead to lower ARPU," said Kunal Bajaj, HSBC telecoms analyst.

Former monopolies have lost revenue as new players built up market share, however even these newer carriers are starting to retrench.

Mobily, an affiliate of Etisalat, ended STC's domestic monopoly in 2005 and has built up a dominant position in mobile broadband as then as claiming about a third of the kingdom's mobile subscribers.

The Haj season

Saudi operator's fourth-quarter revenues will benefit from increased roaming earnings from the Haj season. About 3 million Muslim pilgrims visited the holy cities of Makkah and Madinah, up from 2010.