Investors are bracing for another quarter of gloomy earnings from Gulf telecoms operators, with growing data demand insufficient to offset falling phone call revenues, analysts said.

Former monopolies will again be the hardest hit. Analysts forecast the UAE operator Etisalat's fourth-quarter profit will fall 11.4 percent in what would be its seventh  decline in eight quarters.

'We're coming to the point where most telecom operators can only really hope for a single-digit growth,' said Nishit Lakhotia, telecoms analyst at Securities & Investment Co (SICO) in Bahrain.

Mobile penetration rates in the Gulf are among the highest in the world, with nearly two phones for every person in Saudi Arabia, and once benign competition has intensified as operators fight it out to retain customers, with little room for subscriber growth beyond population increases.

Higher competition means lower voice margins, with operators not only battling each other, but also voice over-IP (VoIP) calling that is much cheaper than conventional calls or even free and increasingly prevalent despite being officially banned in many Gulf countries.

To offset this decline, operators have pushed data packages and sought to upgrade subscribers to contract smart phones, which typically generate more revenue, but analysts warned this could yet hasten their decline by aiding the spread of VoIP.

'Data is cannabilising voice and SMS revenues - the end game will be for customers to have flat-rate pricing for unlimited data, voice and SMS, which will lead to lower ARPU (average revenue per user),' said Kunal Bajaj, HSBC telecoms analyst.

Saudi Telecom Co (STC) and Kuwait's Zain, also former monopolies, are among other operators expected to suffer double-digit profit declines.

Qatar Telecom (Qtel) will likely be an exception and its profit is set to rise about 60 percent, said Global Investment House.  'Resilient ARPU (average revenue per user) and strong customer growth in Indonesia and Iraq are the main revenue drivers,' Global wrote in a note.

Just 20 percent of Qtel's revenue comes from its home market, making it more diversified than Etisalat and STC, which each rely on domestic operations for the bulk of income, meaning Qtel is less affected by sagging Gulf subscriber growth.

Former monopolies have lost revenue as new players built up market share, but even these newer carriers are starting to retrench.

Mobily, an affiliate of Etisalat, ended STC's domestic monopoly in 2005 and has built up a dominant position in mobile broadband as well as claiming about a third of the kingdom's mobile subscribers. This helped its annual profit to triple from 2007 to 2010, but growth is now stagnating, with fourth-quarter profit forecast to fall 1.5 percent and its shares trade at a big discount to analysts' price targets. - Reuters