How MENA broke the bank

The MENA region continues to go from strength to strength, with markets becoming ever-more lucrative and fraud falling. Paul Skeldon takes a look

The Middle East and North Africa (MENA) region has become one of the biggest success stories of the mVAS and carrier billing markets in the past five years. A surge in use of the web – particularly over mobile – during the pandemic saw millions of consumers across the region turn on to just what fun there was to be had in digital entertainment. With many unbanked, carrier billing become the default for how they paid. Mobile internet penetration in the region continues to rise post-pandemic and is expected to surpass 350 million connections by 2023, according to Statista. This has also driven a surge in tech investment in the region, most notably in 5G, AI and cyber security. 5G has become particularly popular in Saudi Arabi and the UAE since its initial limited roll out in 2019.

CONTENT IS KING

From a content point of view, the MENA market has embraced many of the tropes of other content and VAS markets elsewhere in the world, with sports, news, games and video entertainment all flying high.

The most popular mobile games in the region are what you would expect; strategy, action and sims, together accounting for 63% of the market according to the MENA-3 Games Market Report 2022. However, hyper causual gaming is set to be the most popular games category in the region going forward, according to Data.ai’s State of Mobile MENA 2023, growing 28% in a year and its 2.6 billion downloads accounting for 31% of all downloads. By contrast, simulation games account for around 18%.

The esports market is a significant growth driver in the MENA gaming industry. The report highlights that 73% of gamers engage with esports in some capacity, with 14 million esports enthusiasts and 11 million esports gamers. Saudi Arabia has the highest revenue, and Egypt has the largest.

As time as gone on, the market has also come to be defined by a raft of ‘localised’ services, many tapping into the particular tastes in the region – religious content and localised sports and even poetry and traditional stories.

Social media use in the region has also exploded, with five MENA nations already lying way above the global average of 59.3% for uptake of social. The UAE has 100% uptake, Bahrain 98.7%, Qatar 96.3% and Lebanon and Oman both on 90.5%.

Financially, this is injecting a lot of money into the region, with GO-Globe data suggesting that internet ad spend in MENA’s top 14 social markets is worth $4.4bn in 2022.

Apps too are extremely popular. Across 2022, app store spending in the region rose 10.3% year-on-year to $3.1 billion according to Data.ai’s State of Mobile MENA 2023 report. Daily time spent grew 3% to 4.5%, while new downloads increased a massive 45.7% to 13.8 billion - an average of 26,200 apps downloaded per minute.

Users in Saudi Arabia proved to be the most engaged of the country’s key mobile-first markets (Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, and Israel), with an average of 5.5 hours spent on their phones per day.

BATTLING FRAUD IN MENA

This has created a thriving digital entertainment economy across the region, which while attracting investment – not least in infrastructure (see panel) – has also attracted fraudsters.

Battling this has become key to making this success story continue and there have been some real success here. In fact, the annual DCB Index carried out by anti-fraud company Evina and DCB experience developer Telecoming finds that the region is in stunningly good health.

Ranking each country on a five-point scale, the DCB Index provides insights into the Direct Carrier Billing market of countries in the Middle East and Africa region (MEA), ranking them according to their current DCB status and potential to develop this growth-boosting mobile payment method further.

For the first time, the 2023 edition of the DCB Index includes three new countries with positive ratings: Algeria at 2.9, Botswana at 2.3, and Saudi Arabia leading with a score of 3.4.

Among the countries it has looked at for a number of years results reveal that Morocco is the leading country in the ranking, with the highest score (3.6 out of 5). Almost all mobile players are deploying DCB, and that’s why Morocco’s DCB market is a reliable and consistent sector. The market’s resilience and steady progress point to a solid foundation for future DCB development.

South Africa is second this year with 3.5 out of 5. Mobile users in ZA have quickly adopted alternative payment methods, such as mobile money, reaching 8 million users in South Africa this year.

When combined with effective cybersecurity, this trend will enable DCB to boost revenues for mobile players significantly.

At the same stage, Iraq (3.5 out of 5) and Egypt (3.5 out of 5) differentiated by opening more opportunities for DCB deployment and increasing their protection against fraud attempts on Direct Carrier Billing. Saudi Arabia (3.4 out of 5) is one of the new countries in the ranking and follows close behind.

Also, in the Middle East and North Africa, UAE (3.3 out of 5) and Kuwait (3.0 out of 5) stole the show, surpassing last year’s leaders, Qatar down to 2.9 this year from 3.3 in 2022 and Tunisia that goes down to 2.9 from 3.3 in 2023. Algeria is also new onboard and has the same level as Tunisia, with 2.9 points out of 5 on the list.

“As per the latest DCB Index analysis, mobile penetration in Africa and the Middle East is on track to surpass 90% by 2023,” says Roberto Monge, COO of Telecoming. “This significant growth reflects the expanding accessibility of mobile services across these regions. Notably, our findings show an impressive rise in innovation, with the indicator climbing an average of 3.4 points out of 5 this year alone. This trend is joined by the substantial growth of the most innovative new mobile payment solutions.”

He adds: “These advancements are vital in driving the mobile economy, where DBC has already established a prominent presence. Telecoming is witnessing the region’s dynamism and the exciting developments currently shaping the market.”

David Lotfi, CEO of Evina, says: “This year’s ranking shows a modest increase in the overall level of security among DCB players operating in the MENA region. This positive trend is welcome, but should not mask the growing disparity in security levels between players.”

Lofti concludes: “Some players are investing in their development and security on the DCB and reaping significant benefits in terms of growth and profitability, while others are caught in a downward spiral where they find themselves unprotected and under attack by fraudsters who target the least protected regions of the world and avoid defended players.”

‘Digital Corridor’ opens up MENA to rich content and telecoms services

MENA telco Telecom Egypt has joined forces with Oman’s Zain Omantel, to create a new digital corridor connecting the Mediterranean Sea to the Arabian Sea and Arabian Gulf, creating an unprecedented Eurasian data highway.

The innovative infrastructure will extend from Oman’s Arabian Sea and Gulf shores to Egypt’s Mediterranean coastline, employing a high fibre count, cutting-edge blend of terrestrial and subsea segments. The terrestrial segments, spanning Oman, Saudi Arabia and Egypt, promise unparalleled reliability and protection.

On the other hand, the subsea section, directly linking Saudi Arabia and Egypt through the Red Sea, will feature a high-capacity, repeaterless cable system.

The route design will provide Telecom Egypt and ZOI’s partners and customers with the best resiliency and reliability for their end-to-end solution. Furthermore, the infrastructure will be extended to Kuwait, Bahrain, Iraq and Jordan through ZOI’s network and collaboration with the licensed cable landing parties in each country.

This collaboration also offers a revolutionary opportunity for subsea cable owners. By connecting to this open access system, they can significantly reduce their construction costs and greatly enhance latency, resilience, and market response times. Telecom Egypt will develop new infrastructure across Egypt from the Red Sea to the Mediterranean and onwards to Europe, complemented by ZOI’s robust infrastructure across the Middle East.

This new network route will have the shortest, enhanced latency profile, giving hyperscalers, subsea cable providers, carriers and telecom operators improved connectivity options from the Indian Ocean to Europe.

Mohamed Nasr, Managing Director and CEO at Telecom Egypt, comments: “We are excited to collaborate with ZOI on this strategic project; it’s a game-changer in the Eurasia route connectivity landscape. As we look for innovative ways to better serve our customers, we will consistently strive to provide a seamless international connectivity network and increase our diversity layers, without compromising quality, cost or speed. We will do this by leveraging on both Telecom Egypt’s established history in the subsea cables arena and its experienced and competent team.”

Sohail Qadir, CEO at ZOI, adds: “We are delighted to partner with Telecom Egypt on such a ground-breaking project. ZOI was created to revolutionize the wholesale telecom scene and this is an example of what the future holds. We are facilitating the landing of subsea connections through our shareholders such as Omantel and Zain KSA being the licensees in those jurisdictions. This one-of-a-kind infrastructure will be expanded to most of ZOI’s network footprint to maximize the benefit to our group operations across the region. The value that this digital corridor will create is enormous and it will be widely realized in the region and beyond not only from a connectivity point of view, but also on technological, commercial and social levels.”

How India and LatAm are also driving growth

While the MENA region is one of the most lucrative ‘new’ markets for telemedia, India has also become a boom market for DCB around a growing digital economy in the country and the wider Indian subcontinent region. According to data from Juniper Research, India will see a CAGR of Carrier Billing spend of 37.7% – slightly ahead of the MENA region on 37.3%.

Analogous to the MENA region, growth in the Indian subcontinent has been driven by rapidly increasing smartphone penetration and a hunger for content. Many consumers in the region are also unbanked and, while many of the emergent middle class is starting to get bank accounts, driving growth in A2A payments (see page 8), the vast majority use DCB quite widely, even if it is just an onboarding/sign up mechanism for first time users.

There are also signed of growing use of DCB across LatAm. While the region traditionally has a low rate of financial services penetration, Carrier Billing’s spend is expected to increase from 2.6 billion in 2023 to 6.5 billion in 2027, CAGR of 25.1%. The market has shown a huge growth potential and alternative payment methods are becoming more popular, as the digital content consumption and interest have increased with better mobile connections and a higher rate of internet penetration.

Again, A2A payments are taking off in LatAm, but there is a large base of DCB users, making it a tempting market, which may probably become the next big area of growth as MENA and India slows.