Norton Rose: Middle East communications sector shows good short ...

According to interviews with 80 CMT companies with a combined annual revenue of over $250bn, North America has re-asserted its position as the market with the biggest potential for revenue growth and corporate activity. India, previously a market hailed as leading the chasing pack behind North America, Western Europe and China in the CMT sectors, has starkly declined in perceived importance. In the communications sector, the Middle East performs strongly as behind only China and South East Asia in terms of growth prospects over the next two years.

The report - The Search for Growth - shows that over a third (35%) of those in the CMT sectors feel North America represents the greatest opportunity for revenue growth over the next two years, a number which rises to 45% when looking at the next 5 years. In a similar Norton Rose report from 2010, the corresponding figures were just 16% and 13%.

Conversely, India's star seems to have waned in the eyes of many. When we conducted our survey in 2010 over 10% of the interviewees felt India offered the best opportunities for the coming years. In the new report, however, its popularity has fallen sharply with around only 1% ranking India highly.

Other key findings from the report include:
? A big difference in the growth prospects of those involved in the technology and media sectors compared to communications companies, with nearly 50% of technology and media companies anticipating very strong growth compared to just 22% of communications businesses

? Growth will be primarily organic in both the short and long term, although nearly a quarter of respondents (23%) feel expansion into new product markets or lines will be the primary driver of growth over the next five years

? Respondents feel China will overtake Europe to become the second most important region for revenue growth in CMT over the next five years

? South East Asia and South America have displaced India at the head of the chasing pack of promising jurisdictions behind North America, Western Europe and China.

? The Middle East fares best in the communications sector with 11% of respondents indicating that the region offered the best opportunities for revenue growth over the next two years, behind only China (21%) and South East Asia (22%) and on par with Australia and South America.

? Across the whole CMT spectrum, 5% of survey respondents felt the Middle East offered the best growth opportunities for revenue growth over the next two years, putting the region ahead of Africa and Central & Eastern Europe and again on a par with Australia in terms of short-term growth prospects.

? Respondents feel that, in terms of risk, SE Asia and South America are safer investment destinations than China and offer only slightly lower investment opportunities

? 63% of respondents felt there is likely to be an increase in M&A activity in the CMT sectors over the next two years.

Dino Wilkinson, partner at Norton Rose in Abu Dhabi, commented, "In many ways, these are incredibly encouraging findings for the communications, media and technology sectors. There's a general perception that growth will continue, there are opportunities in new markets that carry acceptable levels of risk, and the confidence in all sectors is likely to be characterised by a growth in M&A. There's a significant reorganising of the market though. Whereas two years ago, the market told us growth would come from relatively geographically widespread sources, there's a much clearer sense now that the traditional powerhouses in North America, Western Europe and China will drive much of the growth."

"The regions in the chasing pack are jostling for position behind those three. India has suffered from ongoing uncertainty over the investment environment there, and regions like South East Asia and South America have emerged as potential success stories. The Middle East is certainly seeing some activity in the CMT space, although this is primarily being driven at the entrepreneur and SME level at the moment. However, deals like the LivingSocial acquisition of GoNabit last year and the opening of regional offices by Facebook and LinkedIn are indicators of growing local interest in this sector. The big telecoms players in the region also remain interested in opportunities for growth, particularly in the emerging African and Asian markets."

Source: http://www.ameinfo.com/norton-rose-middle-east-communications-sector-319602

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