Accentuating the positive

Morocco’s telecoms sector has been hit by economic slump, the industry downturn and stalled attempts to introduce competition. Organisers of the Telecomp Maroc conference, however, sought to keep liberalisation and new developments in the mobile market at the top of the agenda

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By  Richard Agnew Published  May 4, 2003

Introduction|~||~||~|Liberalisation and the introduction of competition have been the over-arching issues in Morocco’s telecoms sector over the last few years.

But while the country’s mobile market has boomed since the introduction of duopoly competition in 2000, the government’s efforts to replicate the experience in the fixed and datacomms sector have yet to bear fruit. The last year has also seen a slowing in market growth due to a downturn in the tourism industry and the effects of drought on the agricultural sector, as well as the knock-on effects of the slide in the telecoms industry as a whole.

These factors were reflected in the attendance figures at this year’s Telecomp Maroc exhibition. Fairtrade, the German organisers of the event, reported that around 7,000 visitors and 68 exhibitors from nine countries showed up, although among the cancellations was the second mobile entrant, Méditel.

“Despite the difficult situation in the telecommunication industry and given the overall political situation, Telecomp Maroc sends out a positive note at a difficult time”, claims Taib Bennani, secretary general of the Moroccan ministry of industry, trade and communications at the event.

The organisers were also keen to justify their decision to hold the show, which contrasted with the cancellation of the Arabcom exhibition in Tunisia due to security concerns, the economic situation and impending war in Iraq.

In their welcome message, Martin März, managing director of Fairtrade, and Abderrahmane Ouardane, managing director of the German firm’s local partner Forum 7, said the event was taking place “at a crucial time as worldwide recession meets with a significant downturn in the ICT industry.”

“This scenario affected the world’s largest trade fair CeBIT in Hanover in March, and of course it affected Telecomp Maroc 2003,” they added.

Nevertheless, the two companies persevered and set up the event as a springboard for talks on the liberalisation process in Morocco by encouraging vendors, operators, regulators and government officials to exchange views on market access and the issue of trade links with the EU.
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The Moroccan government’s ‘e-Maroc’ plan, first devised in 1998 to use technology and communications to help meet the standards required of its agreement with the European Union to open up its economic frontiers by 2010, was therefore at the top of the agenda.

Over the next few years, the Moroccan ministry of industry, trade and communications aims to use e-Maroc to address the digital divide in the country, foster infrastructure development, boost the technology sector and position Morocco as a regional hub with the tools for economic and social development.

In a broad sweep, planned and implemented actions include e-government pilots, increased use of IT and the internet in training and education, the development of ‘techno-parks’ at Casablanca and Bouznika, a ‘Universal Service Fund’ to aid investment in new, local technology ventures, and the creation of a regulatory framework for the liberalisation of the telecoms and internet sectors. Under the e-Maroc umbrella, the ministry showcased ten Moroccan start-up companies from the Casablanca Technopark on its stand at the event.

The integration of Morocco’s telecoms sector with the rest of the industry was also flagged up. On days three and four, a series of talks entitled ‘Tools for Trade — standards, certification and type approval” were jointly organised by the ANRT (Agence Nationale de Réglementation des Télécommunications) and the European Telecommunications Standards Institute (ETSI).

Discussions were held on the challenges of telecoms network interoperability so that operators in developing countries such as Morocco can harmonise on standards adopted by their peers around the world.

But attendees at the show were also left to reflect on the mixed progress the government has made in establishing a competitive and liberalised environment in the mobile, fixed and internet sectors, albeit in difficult circumstances.

Despite Méditel’s no-show, the mobile sector has proved to be the main success story of the Moroccan telecoms industry, of which the company’s entrance into the market has played an integral part. Since the introduction of the duopoly system in early 2000, Maroc Telecom’s market share has gradually been wittled down to around 70% as the two operators battled to sign up subscribers on price.

Morocco’s mobile penetration rate has also grown rapidly due to the generous terms offered by the operators on pre-paid and post-paid packages and handset subsidies. Last year saw strong subscriber growth, with Meditel picking up the majority of users added for the first time.

The race to sign up subscribers has seen the mobile market becoming dominated by pre-paid users. More than 90% of mobile subscribers have adopted pre-paid packages in Morocco, and many use their mobiles in a very limited way. As a result, the expectations at Telecomp Maro were that both operators will now shift to a model focusing on moving customers beyond voice and generating growth in usage revenues, rather than subscribers.
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“I think that the market has arrived at maturity,” says Farid Amrouni of Maroc Telecom’s mobile, fixed and internet distributor GSM Al-Maghrib. “Competition in the mobile market has been very intense since 2000 [but now] it is more important to fight on added-valued services than on terminal price. Price mustn’t be the only competitive sale argument. Competition on price is not advantageous for anybody,” he claims.

The introduction of GPRS and new services such as multimedia messaging (MMS), therefore, was on the agenda at the exhibition. Maroc Telecom, which launched its GPRS network at the beginning of March and is expected to introduce MMS in June, demonstrated new multimedia services for companies and consumers, as did Nokia at its stand. Expectations of the services’ likely take up remain mixed, however. “In terms of impact, GPRS is typically niche. The number of users will always remain very low,” says Amrouni. “However, [with a view to] SMS’ success in Morocco, I expect a fast democratisation of MMS in Morocco, if the tariffs are adequate,” he adds.

Meanwhile, hope still prevails that the experience can be repeated in Morocco's fixed sector, although the cheap mobile model is believed to be at least partly to blame for the failure of the government’s tender for a second operator last year and an actual drop in fixed subscribers.

“The fixed line service seems to have lost its lustre in Morocco,” says Hala Baqain, Arab Advisors Group senior research analyst. “The subscriber base is decreasing because of the boom in the cellular market and lack of attention by the incumbent to the segment. The demand for fixed services, at its current rates, is diminishing in the country although the market has a very low PSTN (public switched telephony network) penetration rate. This clearly causes a loss of appetite for any potential investor in the service,” she adds.

Despite the deadline being moved back, none of the twelve companies that declared they were interested in the licence actually came forward with a bid. And in spite of raised expectations of a second attempt this year, no concrete plans emerged at the event. “The government and Maroc Telecom would be delighted to have a second fixed operator this year,” says Amrouni.

Elsewhere, the payphone market, which has continually proved to be one of the main bright spots in the Moroccan telecoms sector, caught the attention of vendors. Representatives from many payphone vendors, including Marconi, IPM, Quicphone and Urmet, attended the show in the expectation of upcoming tenders from Maroc Telecom, which has a minority share in the market, and private payphone operators.

The exhibition followed a rapid period of growth in the payphone market in Morocco over the last few years, with the total deployed rising from 26,649 in 1997 to 61,535 in 2001, according to the Arab Advisors Group.
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But, as far as internet penetration is concerned — another vital factor in building Morocco’s ‘knowledge economy’ — growth still seems a distant prospect. The government’s efforts within the e-Maroc plan to raise internet connections and usage have been hamstrung by the high cost of PCs compared to salaries, a lack of attractive content and the delayed rollout of broadband and new services by Maroc Telecom.

According to Baqain, low internet and PC penetration remain “major hurdles” the the government needs to leap if it is to succeed in bringing about an information-based revolution.

The number of internet subscribers stood at just 60,000 at the end of last year and the market is dominated by internet cafés, which have capitalised on the high relative cost of PCs. Even counting customers of internet cafés, the number of internet users rises to around 300,000, a penetration rate of 1%.

Telecomp Maroc saw some moves being made towards addressing the situation. The event witnessed the introduction of Maroc Telecom’s all-inclusive internet package and claims that it plans to. launch ADSL services later in the year. The operator is currently piloting ADSL and has invited other ISPs (internet service providers) to participate in the trials. However, despite this progress, optimism that the number of paying subscribers will grow in Morocco remains limited.

“The internet market in Morocco suffers from a very low subscriber base,” Baqain says, “[The Moroccan internet market] had a penetration rate of less than 0.2% in 2002. [The government] is trying it’s best but Morocco has a very low rate of GDP (gross domestic product) per capita and very low monthly incomes, and many people are still depending on internet cafes for an internet connection. Also, people mainly use [the internet] for email access and for searching the internet, nothing serious.” Baqain says.

On a wider scope, the under-development of the internet market makes investing in fixed and other telecoms services in Morocco a riskier prospect. There are also few signs that the government’s attempts to improve the distribution of information through the internet will make an impact in the short term.

“Our projections for 2006 [are that Morocco] will not even have an internet penetration rate of 1% — even with the government's efforts,” Baqain adds.
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