Growth slows in the North African telecoms market

According to IDC's recent report, the North African telecoms market experienced just 14% growth in 2002.

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By  Greg Wilson Published  February 3, 2003

After the record-breaking growth in the North African telecoms market between 2000 and 2001, the market experienced just 14% growth in 2002. However, IDC’s newest report predicts the North African market will rebound in 2003 registering 20% growth.

The upturn in the market will be driven of renewed 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 could have experienced much higher growth during the year, but 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,” explains 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 will see the strongest growth over this period, followed by managed data network services.

Although mobile was the fastest growing segment of telecommunications network services in 2002, the rate of growth was lower than that of 2001. IDC attributes this to the economic slowdown in Morocco and Egypt, combined with a shift in operator strategies in both countries.

IDC is predicting that North Africa will see above 25% annual revenue growth in 2003 and 2004 as mobile penetration rates in Algeria and Tunisia increase with the marketing of prepaid services.

Tunisia in particular is expected to see rapid subscriber acquisition by the two operators early on in the forecast period, as Tunisie Telecom starts to aggressively defend 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,” comments Malaki.

Orascom is expected to push prepaid services aggressively 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 is likely to 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.

IDC’s research also revealed that regardless of the efforts of monopoly fixed line operators, the fixed line telephony market experienced the slowest revenue growth, at 2%.

Also, the local telephony market, including voice and Internet calls, will 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 US$552 million in 2006.

For more information on the North African telecoms market please see IDC’s Telecoms and Mobile Communications Services in Egypt and North Africa, 2001-2006 report.

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