Egypt's mobile connections outstrip their fixed-line counterparts following a big jump in low-income subscribers (page 1 of 2)

The extensive market analysis carried out for this study incorporated comprehensive interviews with most network operators and importers, as well as network dealers, retailers and the general public.

Report author, Mr Wisam Francis explains that Egypt's cellular market is currently experiencing unprecedented growth, a phenomenon that BIS Shrapnel forecasts will result in the number of mobile subscribers in Egypt reaching 21.1 million by the end of 2008.

For the first time, total cellular subscribers at the third quarter of 2005 exceeded the fixed-line subscriber base, despite the relatively strong uptake of fixed line subscription in Egypt. By the end of September 2005, Egypt had 12 million mobile and 10.3 million fixed line subscribers. This compares to 9.9 million mobile and 9.7 million fixed line subscribers at the end of June 2005. Moving forward, Mr Francis expects the margin between Egypt's mobile phone and fixed-line subscribers to continue to widen, reaching around 3 million by the end of 2006.

Growth in fixed-line connections

On the fixed-line front, in Egypt — unlike the United Arab Emirates (UAE), Jordan, Morocco and Israel — the fixed-line subscriber base is not showing symptoms of stagnation. Rather, Egypt's landline subscriber base has been growing rapidly, adding an average of 875,000 new fixed line subscribers every twelve months for the past four years (2000-2004). By the end of September 2005, research shows the network reached 10.3 million lines, bringing the penetration rate to approximately 14 per cent. This penetration rate, although ahead of Jordan, is behind Saudi Arabia and well below the UAE.

Growth in wireless connections

On the mobile front, rapid growth has become particularly evident since the third quarter of 2004. The number of mobile subscription adds during the 12 months (September 2004-September 2005) was unprecedented — more than 5.2 million mobile subscriptions were provisioned, according to BIS Shrapnel's study. Putting this into perspective, the increase in the mobile subscriber base during that period is more than the total number of mobile subscribers at the end of 2002, and approximately three times the uptake for 2004.

This trend continued into 2005, with some 2.3 million new mobile subscribers added in the third quarter of 2005 alone. This represented a massive 400 per cent increase on the third quarter 2004 result, when there were only 459,000 new subscribers.

The consequence of competition, foreign investment and improvement in economic conditions are seen as the main factors that have driven growth in Egypt's cellular market. Aggressive strategies adopted by the existing cellular operators have also contributed to growth, according to Mr Francis. Aside from the network expansion which gained momentum, especially following the slight appreciation of the Egyptian Pound, both operators introduced low tariff prepaid services that were bundled with low end mobile handsets. The latter strategy attracted lower spending customers, contributing to a noticeable decline in average revenue per subscriber (ARPU).

Moving forward, BIS forecasts current rates of growth to continue out to 2008. The number of cellular subscribers will exceed 13 million by the end of 2005. This will translate to 5.4 million mobile subscriber adds during 2005. This uptake matches closely only with that forecasted for Algeria and Turkey in the MENA region.