Egyptian mobile phone growth to slow - analyst

Growth in subscriber numbers to be hit this year as market approaches saturation.

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By  Dan Lalor Published  May 11, 2009

Mobile telecom firms in Egypt will see growth in subscriber numbers cut by a third this year as the market for mobile phones approaches saturation, an EFG-Hermes analyst said on Monday.

Marise Ananian, head of telecoms research at EFG-Hermes, said she expected 8 million new subscribers to be added to Egypt's three mobile operators in 2009, after 12 million subscribers were added in 2008.

"We assume market saturation in Egypt will be at 80 to 85 percent (of the population). The mobile penetration rate was at 55 percent at the end of 2008 and there is still room for growth,'' she told Reuters.

Mobinil and Vodafone Egypt are Egypt's oldest mobile providers. The third operator Etisalat Misr entered the market in 2006, adding to competition for lower income customers in particular.

Ananian said Mobinil, with 46 percent of market share, had been most aggressive in seeking new customers but would likely lose some ground to Etisalat Misr, which has about a 13 percent share and could probably reach 22 percent in the longer term.

This month, Mobinil and Etisalat launched corporate schemes to attract clients away from Vodafone Egypt, which has long sought higher-value corporate accounts as shown by an average revenue per user (ARPU) of $11-$12 per month, Ananian said.

By comparison, Mobinil's ARPU is $8-$9 and Etisalat Misr's is about $5 or $6, she said.

Mobinil is at the centre of a row between its main shareholders Orascom Telecom (OT) and France Telecom, who sought court arbitration.

Ananian said it was unlikely the dispute will be resolved soon and the share price of both firms would suffer.

Mobinil has jumped more than 25 percent since April 5, when the court ordered OT to sell its stake to France Telecom. The shares ended trade on Monday at 191 Egyptian pounds.

OT, the largest Arab mobile operator by subscribers, operates in Algeria, Pakistan, Tunisia, Bangladesh, Zimbabwe and North Korea, as well as Egypt via its Mobinil stake.

Ananian sees 2009 as more positive for the firm, after its 2008 profit was hit by the poor performance of its Pakistani unit and a currency slide. She said EFG-Hermes was positive on the long-term prospects for OT's North Korea operations.

"They have exclusivity to provide mobile services for four years ... they will start with high connection fees, relatively high ARPUs, plus they are partnered with government parties so this is helping on the political side, plus the capex allocated there is really minimal." (Reuters)

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