Exceeding expectations

Reforms in Algeria's telecom sector have led to surging teledensity levels.

  • E-Mail
By  George Bevir Published  November 7, 2008

Reforms in Algeria's telecom sector have led to surging teledensity levels.

The last decade has seen Algeria post some of the fastest rising teledensity levels in the region, after the government identified reform of the telecommunications sector as the catalyst for the shift away from a socialist economy to a policy open to both domestic and foreign private sector investment.

While some Middle East regulators are still considering the implications of allowing their customers the choice of making calls over the internet, Algeria has 11 VoIP operators and 67 ISPs to choose from.

How can we operate in a market where the regulator is not respected? - Joseph Ged, CEO of Wataniya-backed Nedjma.

But the second largest country in Africa is not bereft of problems afflicting its telecoms industry; the Algerian telecoms regulator, the Autorité de Régulation de la Poste et des Télécommunications (ARPT), has been simultaneously accused of both ineffectually policing networks' behaviour and being overly heavy handed, and of dragging its feet over some key licencing decisions.

Algeria hit the headlines last month when it was announced that the repeatedly delayed sale of state owned company Algerie Telecom would be postponed once again. Algerie Telecom is the country's biggest fixed-line operator, and the company behind the second biggest mobile operator, Mobilis. Despite its position as the first telecoms company in Algeria, it did not begin large scale investment in its mobile operation until late 2004, giving Egyptian owned Orascom Telecom and its Algerian subsidiary Djezzy time to build a sizable base from which it has been able to maintain its position as the country's largest mobile operator.

Completing the trio of Algerian mobile operators is Wataniya-backed Nedjma. Combined, all three operators claim to have 26.6 million subscribers from a population of 33.8 million.

Michael Dickmann, country director for Nokia Siemens Networks Algeria, says that although penetration rates may be over-inflated by the distribution of multiple Sim cards, the country is "very well developed" in terms of mobile subscription rates.

"On the fixed line side, there are 3.9m subscribers, and the fixed network will see a large extension in the next four to five years, so they are going up to six, and some of them say ten million lines on fixed, so they will heavily invest in fixed technology," he adds.

Analysts from Business Monitor International (BMI) are optimistic about the fortunes of the sector. "The market exceeded our expectations in 2007, growing by 26% to hit almost 28 million subscribers by the end of the year. As a result, we have revised our mobile forecasts upwards and now expect penetration to exceed 100% in 2011," one analyst comments.

When the sale of Algerie Telecom does eventually take place, BMI expects it to attract "considerable interest" from operators around the world, drawn by Algeria's large population and growing wealth. Indeed, reports suggest that acquisition hungry Middle East telecoms giants Etisalat and Zain could be interested in the operator.

3G or not 3G?

With the collapse of global money markets, telecoms chiefs in Algeria may be forgiven for the latest postponement of the sale of Algerie Telecom. But the ARPT has been accused of dithering over other issues, including the issuing of 3G licences - at a time when other nations are considering upgrading existing 3G to 4G technology.

The Nokia Siemens Network Algeria boss says that the regulator has even raised the prospect of bypassing 3G and waiting instead for 4G, LTE technology.

"The point in the questionnaire (issued by the ARPT) was do you think it would make sense to go directly to 4G, because if you look at the timescale around the existence of 3G in Europe or other more developed markets, the time they have to wait would be just two more years and then the technology would be available," says Dickmann.

He believes that the regulator is right to adopt a reflective stance on the issue, but prolonged waiting is not a prospect that pleases Joseph Ged, CEO of Nedjma, Algeria's third largest mobile network by subscriber numbers.

"I don't think [moving directly to 4G] is the right move," Ged says. "I think it will delay the process again and again. I think it is about time to issue the licenses - almost all the countries in the region have them," he says.

"There is a major need in this market for high speed data," he adds. "The fixed operator and the fixed network are underperforming in quality and in availability, so the fixed market in Algeria is around 10-11 percent, mobile penetration is around 70% so there is a huge opportunity for the mobile operators to serve this market in a well structured way with quality of service and high speed. So let's not delay further," he says.

Ged adds that he has "no idea" when 3G licenses will be issued. "There have been so many dates and so many delays, frankly speaking, I have no clue." Despite its pensive approach towards 3G, the ARPT has been credited for its role in liberalising the telecoms market and allowing it to develop, leading to 11 VoIP providers, and 67 ISPs in the country.

"What it shows is that the regulator has been very progressive here," Dickmann says. "They allow the coexistence of many ISPs and are also very liberal on the voice over IP licence. This is quite unusual in these countries and it shows that the regulator is trying to get the country up and running."

Fixed line and mobile subscribers combined grew from 6% of the population in 2000, to 90% in 2007, according to figures from the International Telecommunication Union.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code