North African telecommunications market shows 14 per cent growth

According to a new IDC study, Telecoms and Mobile Communications Services in Egypt and North Africa, 2001-2006, the telecom services market in North Africa is expected to rebound to 20% growth in 2003. IDC believes this will be driven by a resumption of growth in the Egyptian telephony and mobile market, and a boom in Algeria and Tunisia's mobile revenue.

Both the mobile and telephony markets in the North African markets could have experienced much higher growth during the year, had it not been for the macroeconomic conditions in the Egyptian market. "The continuation of the economic recession in Egypt, along with the country's currency devaluation, dampened the growth in the local market, and affected revenue for the country in dollar terms," explained Mohsen Malaki, Senior Analyst in IDC CEMA's Telecommunications Group.

Having reached a total value of US$3.79 billion in the year 2001, the North African market is forecast to grow to US$7.19 billion by 2006. Mobile services should see the strongest growth over this period, followed by managed data network services. IDC's study revealed that despite the expansionary efforts of monopoly fixed-line operators, the fixed-line telephony market experienced the slowest revenue growth, at 2%. Local telephony, including voice and Internet calls, is projected to increase modestly through 2006, long distance is forecast to show declining growth, while fixed-to-mobile calls will witness the fastest growth in the telephony market, to reach a value of $552 million in 2006.

Even though mobile was the fastest growing segment of telecommunications network services in 2002, the rate of growth was lower than that of the year 2001. This can be attributed to economic slowdowns in Morocco and Egypt, along with a shift in operator strategies in both countries.

North Africa should see above 25% annual revenue growth in 2003 and 2004 as penetration rates in Algeria and Tunisia increase with the marketing of prepaid services to the mass market, according to the IDC report. Tunisia in particular is expected to see rapid subscriber acquisition by the two operators early on in the forecast period, as Tunisie Telecom becomes aggressive in defending its market share from the new entrant. "The difference in the anticipated reaction of the incumbents will also influence the entry strategy of the new competitor, which in both countries is Orascom Telecom, although Kuwait's Wataniya is an equal partner in the Tunisian operation," said Malaki. IDC expects Orascom to push prepaid aggressively and early on in Tunisia to catch up with the incumbent, while in Algeria it will skim the market for high-end contract users as the incumbent negotiates its network expansion contract with vendors.

"With the exception of Morocco, where operators are expected to shift strategies to usage growth in 2003, these trends will result in a return to high growth in prepaid connections for the rest of the region, in 2003," explains Malaki. This should continue until 2006, when operators in Tunisia and Algeria will also shift strategies from prepaid growth to growth in usage, while attempting to migrate high-end prepaid subscribers to contract subscriptions.

The report, Telecoms and Mobile Communications Services in Egypt & North Africa, 2001-2006, (IDC #ZT04J), examines the North African telephony services and mobile communications services in detail, looking at the regulatory and competitive environments, new and incumbent operator strategies, and services demand for each country in the region. For fixed telephony, market data is provided for residential and business segments by size, and services are segmented into such categories as local, national, fixed-to-mobile and international services. For the mobile communications services, the report provides subscriber and revenue figures, SMS and data services to 2006. The report covers the countries of Morocco, Algeria, Tunisia, and Egypt.