Telecom operators (telcos) across the Middle East may be entering an important phase in their evolution. For years, regional telcos have benefited from healthy margins and relatively stable customer bases. However, they now operate in a changing market where traditional drivers of growth, such as demographic expansion, high Average Revenue Per User (ARPU) and broad infrastructure and service improvements, may no longer reliably deliver the same results.
The success telcos have seen over the past years is becoming less predictable thanks to factors largely outside of their control. Customers are becoming more demanding, influenced by global digital trends and increasing expectations for seamless, always-on connectivity. At the same time, competition is becoming more intense, with new tech players and global giants, including hyperscalers like AWS and Microsoft, gaining ground. These changes coincide with increased investment activity across Middle Eastern markets, including by regional sovereign wealth funds, further reshaping the competitive landscape. Finally, inflation continues to increase pressure on telcos to manage both their Opex and Capex costs
Telcos are grappling with challenges that stem from their own operating models and management systems. Many still operate within large, complex structures with duplicated roles and inefficient workflows. These telcos risk missing two critical opportunities today: catching up with faster-moving competitors and capturing the value creation potential of (Gen)AI and other frontier technologies.
The barriers are largely structural. Rigid processes and slow decision-making can limit innovation and responsiveness. At the same time, a widening gap in advanced skills and training, particularly in digital services and B2B, as demand for talent outstrips supply, limits the ability to design and scale new business models, often due to a lack of skilled talent. Go-to-market execution is often fragmented by internal friction and misalignment between core business units and ICT-focused subsidiaries. As a result, many telcos remain in the early stages of adopting AI to enhance customer experience or improve operational efficiency, even as the technology reshapes value pools across the industry.
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Although many operators still enjoy robust bottom lines, the changing nature of the market means that past successes cannot sustain them and should not be taken for granted as indicators of future success.
In the past 3 years, the Total Shareholder Return (TSR) of the majority of telco operators in the Middle East have been observing a slower growth than comparable companies in Asia, Europe and North America. The average 3-year TSR of companies in these regions was between 11% to 13%, whereas operators in the Middle East averaged out at 7%. Exceptions include Mobily, Du and Vodafone Qatar. (Exhibit 1)
Graph: Telecom operators TSR comparison by region.
Given this context, the need for transformation would be a priority among regional telcos looking to safeguard and grow their position within the market. Organizations that prioritize transformation, embedding agility, digital capabilities, and AI into the core of their operations, are more prepared to safeguard their relevance and unlock new growth. Those that continue to rely on legacy strategies, rigid hierarchies, and outdated processes risk losing competitiveness over time. In today’s market, transformation is transformation is increasingly becoming an important driver of competitiveness.
Yet transformation is not a reactionary measure. Instead, transformation can be approached proactively and can serve as a launchpad for new revenue streams, from digital platforms and data analytics solutions to partnerships that reach beyond traditional telecom offerings. The need for transformation is not driven solely by financial imperatives. Across the region, stakeholder expectations are shifting, whereby regulators, investors, and customers alike are encouraging companies to demonstrate continued innovation.
Change Management: The Core of the Transformation Process
Based on insights from over 1,000 transformations worldwide, BCG has developed a comprehensive, results-driven framework that places equal emphasis on the "What" and the "How." The "What" defines a clearly articulated portfolio of initiatives aimed at driving top-line growth and optimizing cost efficiencies. The "How" focuses on the critical enablers required to deliver and sustain impact, spanning operating model alignment, change management, discipline in governance, and performance culture. This experience has taught us that change management lies at the heart of successful transformations.
When starting a transformation process, it is tempting to focus on technology investments and cost-reduction exercises. While focusing on technology investments and cost-reduction efforts are important, they risk underdelivering if not driven by clear strategic mandates that set change management atop the agenda. Putting the human elements of culture, leadership incentive, collaboration, and a solidified vision at the core of transformation can help create an environment in which transformation is more likely to succeed.(Exhibit 2)
Governance and the Need for Structure
To set up any transformation process for success, it can be important to align around a vision that’s often led by a Chief Transformation Officer (CTO), who has a clear mandate, and support, from the executive team. The goal is to create a long-term company strategy and a roadmap toward transformation that is supported at the very top of the organization. Ideally, the CTO coordinates with a specialized Transformation Management Office (TMO) that works across business units, ensuring that day-to-day operations and strategic initiatives align and progress with fewer bottlenecks. Creating and reinforcing the right culture throughout the organization is just as vital. Transformation is not a temporary project. As such, top management often seeks to embed new ways of working into daily routines, ranging from data-driven decision-making to the creation and support of agile cross-functional teams. These initiatives can help encourage a transformation-oriented mindset across the company.
Given the disruptive and challenging nature of transformation initiatives, the telco’s governance structures can play an important role in supporting the initiatives intact. Regular leadership forums, weekly or biweekly, depending on the pace of the transformation, can support executives and workstream owners in sharing updates, escalate issues, and making timely decisions.
By standardizing the inputs and outputs of these forums (for example, through dashboards on operational key performance indicators, financial forecasts, and milestone statuses), teams can rely on consistent data and desired outcomes that can help guard against misalignment. The TMO oversees the meeting process and helps to ensure consistency in terms of reporting, risk management, and issue resolution. If implemented effectively, this element can become an important enabler of the broader transformation, ensuring that leadership can act in a confident and forward-thinking manner.
Financial discipline underpins these structural shifts. Even the most enthusiastic team may lose momentum if the financial benefits and timelines are not clearly communicated. As a result, a precise baseline of current financial performance is required. This entails mapping out revenues, costs, and potential areas for improvement, with the help of a uniform tracking system, so that gains or shortfalls can be more easily identified.. All of this means that key financial incentives and KPIs can be aligned with milestones along the transformation roadmap.
Designing a Transformation Roadmap
Stage gates serve as structured checkpoints through which transformative ideas advance, from ideation to closure, while assessing operational feasibility and financial impact at every stage. This structured process can help support efficient resource deployment, and that underperforming initiatives can be reevaluated or replaced without delay. (Exhibit 4)
An effective roadmap brings all these elements together, tying short-term gains to a longer-term strategic horizon. The initial phase sees a rapid assessment that analyses current challenges and highlights a handful of quick wins. Quick wins can provide immediate financial or operational benefits, and can reinforce that change is feasible and supports organizational goals. Over time, transformation activities typically expand. Business cases are refined, each initiative is assigned an owner, and the new governance model takes shape. It is during this period that cultural considerations can be actively addressed.
Effective transformation requires strong change management and continuous upskilling. Organizations can work to help employees understand not only the why behind change, but also the how, through clear communication, leadership alignment, and targeted capability-building and training. For example, initiatives that strengthen digital literacy, project delivery, or financial acumen can help embed new ways of working that support long-term performance. All these steps can be linked to expectations and KPIs, creating an environment in which all team members understand the process, its benefits, and what is expected of them.
Once fully underway, transformation efforts will reach deeper into the operational core, from revisiting outsourcing deals to overhauling customer experience workflows with AI. By this stage of the transformation, the organization is typically more familiar with the changes introduced by the program, including weekly performance tracking, transparent cost-benefit analysis, and timely issue resolution.
If market conditions shift, as they often do, leaders can pivot quickly, adjusting roadmaps or funneling resources into emerging opportunities.
Creating a Sustainable Transformation Culture
Many transformations face challenges sustaining momentum when moving beyond these clearly structured phases. Employees may return to previous ways of working, or financial pressures might discourage investment in capability building. To keep the process on track in the face of challenges, leaders have a range of tools at their disposal to communicate with their teams and reinforce the transformation’s relevance, reminding teams that the goal extends beyond addressing short-term financial pressures, but to create a stronger, more agile organization with an established transformation culture.
Highlighting progress toward measurable goals and milestones can be a powerful motivator, whether these measures are improved customer satisfaction scores, cost savings, the successful implementation of AI, or next-generation solutions like the deployment of 5G applications. Highlighting and communicating success stories is also crucial, particularly if they involve teams working together in ways that were previously less common.
In the long run, the organization’s people play an important role in the success of large-scale change initiatives.
If the company’s transformation is entirely based around advanced analytics platforms, or meticulously planned cost reductions, the transformation effort may face challenges if employees do not understand and support the objectives. Culture, change management, and incentives are vital parts of any serious change and must be counted as serious, quantifiable components of the transformation.
Simply put, defining expected behaviors (such as personal accountability, customer-centric thinking, and swift decision-making) and linking them to tangible rewards can increase the likelihood that these behaviors are sustained over time.
This process is not about imposing strict rules, but about creating an environment that encourages teams to sustain high-performance habits. These habits can be incentivized to further promote the benefits of a transformative work culture, not just for the company, but for the staff themselves
The Role of AI in Next-Generation Telcos
(Gen)AI is a vital component of any next-generation transformation as it can provide the insights and automation processes that help tie strategic ambitions together with day-to-day execution. Telcos that can embed AI into the transformation roadmap from day one can pivot faster, quickly discover new opportunities, and optimize resources with greater precision. In short, AI amplifies the impact of transformational initiatives, and can help them remain dynamic and ongoing over time.
The telco environment in the Middle Eastis evolving rapidly. Operators may find that legacy approaches and advantages are becoming less effective in this dynamic market. However, by fully embracing a process of transformation, anchored in leadership, cultural alignment, disciplined execution, and rigorous governance, established players can ensure they remain at the forefront of the industry. Transformation is often viewed as a strategic enabler. It can serve as a strong pathway to unlocking new areas for growth, allowing companies to secure their position as digital leaders in one of the world’s most exciting markets. (Gen)AI will be central to this journey. As a core enabler of next-generation transformation, it can help connect strategic ambition with execution, accelerating agility, uncovering new sources of value, and supporting efforts to keep transformation dynamic, continuous, and future-oriented.
Telcos that follow a transformational approach will be better positioned to protect profitability and build a future-forward organization that is ready to thrive.
Building the Telco of the Future
The coming decade will determine which telecom operators in the Middle East lead and which fall behind. Success will depend on how decisively leaders embrace transformation, not only through technology but through a fundamental rethinking of culture, governance, and execution. Those that embed agility, digital capabilities, and (Gen)AI at the core of their strategy will move from reacting to disruption to shaping the future of connectivity.
For telcos that act now, transformation can be an important pathway to renewed relevance, sustainable growth, and long-term leadership in the region’s rapidly evolving digital economy.
