MENA Telecoms Pivot to the Cloud: Ericsson-Zain Deal Sparks a Region-Wide Infrastructure Revolution

The telecom landscape in the Middle East and North Africa (MENA) is undergoing a seismic shift. Ericsson’s recent partnership with Zain Jordan to modernize its charging systems and cloud infrastructure—a deal emblematic of a broader sector-wide reallocation of capital—is unlocking value long trapped in legacy networks. Paired with Ooredoo’s tower consolidation push, these moves signal a decisive pivot toward asset-light strategies, where operators monetize passive infrastructure to fund cutting-edge 5G and cloud-native platforms. For investors, this is a high-conviction opportunity to capitalize on a region-wide re-rating of valuations, with Q3 2025 poised to deliver critical catalysts.

The Ericsson-Zain Deal: A Blueprint for MENA’s Digital Future

Ericsson’s agreement with Zain Jordan is more than a software upgrade—it’s a template for how operators can future-proof their businesses. The partnership modernizes Zain’s Business Support Systems (BSS) to a cloud-native model, enabling a catalog-based business model that personalizes prepaid services and accelerates 5G monetization. Crucially, the deal also includes migration of voice services to Ericsson’s Cloud IMS, replacing outdated 2G/3G networks with VoLTE and Wi-Fi calling. This isn’t just about incremental efficiency; it’s a foundational step toward 5G-enabled services like augmented reality, IoT, and AI-driven customer experiences.

The financial upside is clear: cloud-native systems reduce operational costs by 30–40%, while creating new revenue streams from data-heavy services. For Zain Jordan, this aligns with Jordan’s Vision 2025, which mandates telecom modernization to fuel the digital economy. But its broader significance lies in proving that operators can unlock trapped capital by shedding legacy infrastructure while still investing in growth.

Ooredoo’s Tower Consolidation: The Asset-Light Playbook in Action

While Ericsson’s deal focuses on software, Ooredoo’s tower consolidation exemplifies how operators are monetizing passive assets to fund strategic growth. By merging its 20,000 towers with Zain and TASC Towers into a $2.2 billion regional TowerCo, Ooredoo is divesting capital-intensive infrastructure to focus on high-margin digital services like data centers, subsea cables, and fintech.

The financial benefits are already evident. Ooredoo’s FY2024 results saw a 14% surge in net profit to QAR 3.4 billion, driven by reduced CapEx and higher free cash flow. The TowerCo’s projected $500 million in annual revenue and $200 million EBITDAaL further validate this strategy. However, delays in conflict-affected markets like Sudan underscore execution risks—yet the 12–18 month timeline for full consolidation means Q3 2025 will be a critical quarter for closing deals and re-rating valuations.

Why Now? The Perfect Storm for Telecom Re-Rating

Three forces are aligning to create an inflection point:
1. Regulatory Tailwinds: MENA governments, from Jordan to the UAE, are mandating digital transformation, with telecom infrastructure as a priority.
2. PE Capital Inflows: Private equity firms are primed to fund infrastructure divestitures, as seen in Ooredoo’s TowerCo. Global PE firms hold $300 billion in dry powder, targeting fiber, towers, and data centers.
3. Technological Imperatives: 5G and generative AI (gen AI) require scalable cloud-native platforms, which Ericsson’s software and Ooredoo’s infrastructure investments are uniquely positioned to deliver.

For investors, the thesis is straightforward: buy operators and infrastructure providers executing asset-light strategies. Ericsson’s role as a cloud-native solutions leader and Ooredoo’s TowerCo-driven efficiency gains make them top picks. Meanwhile, Zain Group’s progress in Kuwait (3,889 towers already consolidated) and its 49.3% stake in the new entity offer further upside.

Risks and Considerations

While the trend is undeniable, risks remain. Geopolitical instability in some markets could delay asset transfers, and operators must avoid over-reliance on third-party infrastructure for critical services. However, the 5.5% annual growth projected for MENA’s telecom sector through 2030, coupled with Q3 2025 deal closures, suggests these risks are manageable.

Conclusion: Act Now Before Valuations Take Off

The Ericsson-Zain deal and Ooredoo’s TowerCo are not isolated events—they are the first wave of a region-wide restructuring. By Q3 2025, expect to see:
- Valuation re-ratings as operators report lower CapEx and higher cash flow from asset sales.
- Strategic partnerships with PE firms to fund fiber and data center expansions.
- New revenue streams from 5G and gen AI services enabled by cloud-native infrastructure.

For investors, the time to act is now. Ericsson, Ooredoo, and Zain Group are the linchpins of this transformation. Their ability to reallocate capital from legacy networks to digital services will define the next era of telecom growth in MENA—and deliver outsized returns for those who act decisively.

Invest now before the Q3 catalysts ignite the next wave of telecom valuations.