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The region’s most competitive cellular markets

New research from the Arab Advisors Group, which ranks the level of competition in the Arab world’s cellular markets claims that Palestine’s Jawwal faces the most intense competition from the four Israeli operators that cover the West Bank and Gaza followed by Sudan and Jordan.

A new research report from the Arab Advisors Group, which ranks the cellular competition intensity index (CCII) based on the intensity level of competition in the Arab world’s cellular markets and the ownership structure and revenues of all operators claims that Palestine’s Jawwal faces the most intense competition in its market from the four Israeli operators that cover the West Bank and Gaza followed by Sudan and Jordan.

The report titled ‘Competition Levels in Arab Cellular Markets & Privatisation levels in Arab Cellular and Fixed Markets’ pegs Palestine and Sudan as the Arab world’s most privatised telecom markets.

“Our results show that Palestine’s telecom market is the most privatised with the private and foreign investors having a 100% proportionate share of 2003 revenues. Coming second was Sudan (72%), followed by Jordan (68%), Kuwait (55%), Bahrain (53%), Yemen (53%), Algeria (48%), Syria (46%), Morocco (41%), UAE (40%), Egypt (37%), Qatar (35%), Saudi Arabia (20%), Tunisia (12%), Oman (0%) and Lebanon (0%),” explains Adila Bouleghraif, co-author of the report.

Lebanon and Oman had the least privatised telecom markets, with 100% government share (ownership) of telecom revenues. Both countries scored in the bottom half of the CCII. Bahrain and Saudi Arabia scored the highest share in the public sector with 10%, but also ranked eleventh and twelfth out of sixteen countries in the index.

In terms of local private sector revenue share, Palestine and Kuwait scored highest with revenue shares of 100% and 55%, respectively. In terms of foreign ownership proportionate share of revenues, Jordan scored well above the rest with a 61% revenue share, followed by Morocco, Sudan, and Algeria.

For instance, the total private and foreign proportionate share of 2003 revenues stood at 100% in Palestine and 72% in Sudan. Oman and Lebanon ranked at the other extreme with 100% full state ownership of the sector. This will change markedly in Oman with the second GSM license issued to QTel consortium this year says the Jordanian research firm.

The index takes into account the number of operators, packages, and services available in each country, with each category being assigned a percentage weight as determined by its importance as an indicator of competition.

Based on 2003 revenue data, it had parameters such as licensed operators, working operators, market share of largest operator, number of current prepaid and post paid plans, availability of closed user groups, availability of international long distance.

“The weights assigned add up to 100%, the perfect score a country can receive in terms of cellular competition. For the number of licensed and working operators, each figure was separately divided by the highest figure of that category, and subsequently multiplied by its weight,” says Yaman Al Jundi, Arab Advisors research analyst who co authored the report.

The revenue proportionate share was calculated by multiplying each operator's share of total revenues by the percentage shares owned by government, public sector institutions, local private sector and foreigners in the country.

For example, if a cellular operator contributes 30% of total revenues of the sector and is 50% owned by foreign investors, then the share of these foreign investors of the total revenues would be 30% multiplied by 50%, which equals 15%. Shares traded at the local stock exchanges of each country were calculated as local private sector even though many foreigners may hold them.

In terms of licensed operators, Jordan has the highest figure in the region with four. In the case of Kuwait, the firm divided its current number of licensed operators with Jordan’s figure (two divided by four), resulting in a score of 0.5, in other words 50% of the highest regional figure. This number is then multiplied by 15% and added to Kuwait’s total score. The same technique was followed for the number of postpaid and prepaid plans adds the research firm.

Countries with new operators entered the market late in 2003 or in the last seven months of 2004, such as in Bahrain and Tunisia were not covered in the report.

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