Deep pockets and a superior ability to manage regional risk have prompted telecommunications companies from the Gulf Cooperation Council (GCC) states—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE)—to launch aggressive expansion strategies, such as investing in African and Asian countries while most Western companies have hesitated. In some markets, these efforts are starting to pay off as potential growth turns into real revenues. But to build on this initial success, GCC telcos must enter a new phase and become masters of execution.

The GCC’s integrated and wireless telecom companies have grown rapidly over the past three years under near-ideal conditions at home. Typically, only one or two operators are licensed to compete in each of the GCC’s markets, which boast high penetration rates (in certain cases, blanket coverage) and affluent subscriber bases. Average revenues per user and pretax margins are some of the highest in the world. GCC companies also rank high among global competitors by such measures as market capitalization, despite the relatively small size of their home markets, which range from 0.8 million to 18 million subscribers.

With substantial cash flows and saturated markets at home, GCC telcos have started looking abroad for growth...