Wataniya aims to match Orascom

Wataniya is aiming to replicate the rapid subscriber growth generated by its rival, Orascom Telecom, after launching Algeria’s third mobile network last month.

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By  Richard Agnew Published  September 27, 2004

|~|wataniya1.gif|~||~|Wataniya is aiming to replicate the rapid subscriber growth generated by its rival, Orascom Telecom (OT), after launching Algeria’s third mobile network last month. Opening its Nedjma-branded service, the operator pledged to sign up one million subscribers by the end of next year. That would require its uptake to be on a par with OT’s early growth after the Egypt-based mobile operator set up shop in Algeria during 2002. Given its third-to-market position, Wataniya has made visible efforts to offer something new to the market. Announcing its launch, the operator made much of its position as the first network in North Africa to deploy EDGE. This, it says, will give it an opportunity to woo high end customers away from OT and incumbent, Algerie Telecom, through higher speed access to data applications and multimedia content. But considering the market’s immaturity and relatively low GDP per capita, the key benefit of the EDGE network is expected to be its ability to support a higher quality voice service. Wataniya argues that a focus on getting the basics right will help it exploit pent-up demand in a country where only around 2 million out of 32 million people currently have mobile phones. “We are on record as saying that we will have one million subscribers next year,” says Ahmad Haleem, chief executive officer, Wataniya Telecom International. “Our strategy will be a combination of good pricing, transparency and quality. We are avoiding gimmicks. Customers haven’t found a reason to use data services other than plain old SMS, so in Algeria, it will be more a matter of strategy, execution and communication,” he adds. Naturally, Wataniya also plans to heavily focus on generating pay-as-you-go uptake, while bringing down prices and squeezing average revenues per user (ARPU). As well as lowering call tariffs currently available in the market, it has tailored various usage-based packages for both pre-paid and contracted subscribers. It also claims to have 1,500 points of sale in place where users can buy top-up cards. “The entire Arab region is a pre-paid area, especially North Africa,” says Haleem. “Pricing in Algeria is probably the highest in the region yet GDP per capita is very low, so people will be looking for lower prices. But our main concept is that whether you’re post-paid or pre-paid, your pricing will be the same based on your volume of usage. Normally, pre-paid is one price fits all, but we’ll have different pricing for different customers,” he adds. Wataniya’s target also seems do-able simply because uptake of mobile services in Algeria has been accelerating. Orascom’s Djezzy service, launched in February 2002, took little time to overtake Algerie Telecom’s GSM arm and had hit the one million-customer mark eighteen months later, by September 2003. The operator, however, is reckoned to have taken only until July this year to sign up its second million subscribers. Analysts also argue that there is plenty more room for expansion left in the market and predict that Algeria’s subscriber base will grow from 2.4 million subscribers in December 2004 to 7.9 million in 2009. “Demand for mobile services in Algeria is increasing as the services gain more visibility through marketing and subscriber growth, and as coverage improves,” explains Lucy Norton, senior telecommunications analyst for the Middle East at the World Markets Research Centre (WMRC). “Both Orascom and Wataniya could [sign up] one million subscribers over the next year,” she predicts. Whether both operators will face more stern resistance from Algerie Telecom also remains to be seen. The incumbent will be aware that it is now in danger of dropping from second to third place in its home market. It also opened 500,000 new mobile lines earlier this year, after handing a US$162.5 million contract for their installation to Ericsson in February 2003. But with Algerie Telecom’s user base remaining well below that of Orascom, analysts predict that Wataniya will not take long to catch up. “Algerie Telecom is investing. But it is trying to expand on many fronts at the moment, including ADSL and wireless local loop, so is restricted in how quickly it can respond to market developments,” argues Norton. It remains to be seen how the Algerian operators can retain revenue growth once subscriber expansion slows. But the licence should provide quite a coup for Wataniya, especially when the US$421 million fee it paid is compared to charges paid by some of its rivals for the right to enter other regional markets. Wataniya’s bid was enough to see off a range of international and regional players in an auction held during 2003, and the operator has committed US$100 million towards setting up the operation this year. The operator is aiming to break even in Algeria as early as 2006. “Algeria does not promise the same return on investment in data services as wealthier markets,” says Norton. “But alongside Iran, it is arguably the largest 2G new entrant opportunity in the region, given its low tele-density, relative wealth levels and population size,” she adds.||**||

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