Smartphones might be more popular than ever but the global telecommunications industry faces the bleakest outlook of any industry sector.
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Telecoms share prices proved resilient in the financial crisis but they have failed to keep pace with the recovery in the global economy. Its projected revenue growth rate of 2 per cent lags behind all other industrial sectors.
Regulation, high infrastructure costs and falling revenues from voice calls have made telecoms the ugly duckling of the investment community, executives said at a conference in Dubai.
"As the world and stock markets crashed in 2007 and 2008, what we saw in that period was that telecoms remained somewhat resilient," said Simon Holden, the global co-head of telecoms at Goldman Sachs International.
"As all of the stock markets have bounced back … the valuations in the telecoms sector have not come back to the same extent."
According to a report last year by the analyst firm Booz & Company, the telecoms industry "escaped the worst" of the recession, with steady revenues and higher subscriber numbers.
In the first half of 2009, for instance, India added 142 million internet subscribers and China added 87.4 million, while the US added only 14 million, Booz said.
But Mr Holden said the global telecoms industry faced poor revenue projections, which could even fall behind increases in GDP.
"The revenue projections for the telco sector are the lowest of any industrial sector," he said.
"Most revenue projections in aggregate across most major industrial sectors are between 4 and 7 per cent, and for telco, it's just a bit less than 2 per cent.
"If you go back in time, these businesses were basically infrastructure monopolies, they were total-regulated.
"Arguably, perhaps we've got ourselves back into a position where we're not able to grow the industry in many mature markets even in line with GDP, because of the competitive environment."
Regional telecoms chiefs acknowledged rising infrastructure costs and falling revenue-per-user numbers could hit future profits.
"If we keep deploying networks at the same rate with the same cost structure as we are used to, with much faster speed than before, we could get into an area where costs start exceeding revenues and we will have significant financial pressures in the industry," said Ghassan Hasbani, Saudi Telecom's chief executive of international operations. Others noted growth opportunities in the region such as in broadband, mobile data and in under-served markets such as Syria.
Ross Cormack, the chief executive of the Omani telecoms operator Nawras, said broadband was the key growth opportunity for his business.
"Only 25 per cent of our customers use any significant amount of broadband - so that's the kind of growth [potential] across the group," Mr Cormack said.
Mergers and acquisitions (M&A) and other forms of consolidation within the industry could also help Middle East players remain profitable, other executives said.
"There are still huge growth opportunities within this region … and there is still lots of room for efficiency improvements," said Mike Miller, the group treasurer at the Kuwaiti telecoms firm Zain.
"Our growth is very much focused on a much smaller M&A."
Mr Hasbani said better management of customer data use and consolidation and collaboration among regional operators could also make the industry more efficient. "Although there might not be major acquisitions as such, there is … room for consolidation within the industry," he said.
But Mr Holden said he was "not quite as optimistic" about possible M&A activity in the region.
"I don't think we're going to see megabillion-dollar deals but I think there are plenty of hundreds-of-millions," he said.
Mr Holden added, however, there was "significant" opportunity for consolidation in the Middle East.
