22 Jul 2009

All eyes on North Africa for the next big emerging market opportunities

North Africa is a difficult region to study: while the Maghreb area in the West is a relatively clearly defined sub-region comprising Morocco, Algeria and Tunisia, it is more difficult for a country like Egypt to be positioned as typically North African, considering its ties with the Middle East.
In the telecoms markets though, the links are clearer: similar degrees of liberalisation (except Libya, but change is coming), maturing markets with growing data/broadband opportunities (including three in Africa’s top 5 largest mobile markets: Egypt, Algeria and Morocco), and the same group of investors (France Telecom, Orascom, Vivendi, Wataniya, Q-Tel, Etisalat). In the last few months, all North African markets have been in the news, mostly reporting growth trends and new opportunities.
Egypt is still leader in the region, and one of Africa’s top ten mobile markets, thanks to a strong fixed offering (from incumbent Telecom Egypt and several established ISPs) and 3 dynamic mobile operators: Mobinil, Vodafone Egypt and latest entrant Etisalat Misr. Mobinil has been the subject of a dispute between its two owners France Telecom and Orascom Telecom as the former has been trying to secure full ownership of the company. Orascom ended the legal action it had started against the French operator, but the dispute has still not been sorted and now the regulator is involved. The country’s broadband market is very healthy (one of Africa’s leaders) thanks to good fibre infrastructure, a strong fixed market and mobile broadband services offered by all three operators.
Libya was the first country in the region to exceed 100% mobile penetration at the end of 2008, with 7.5 million subscriptions shared between market leader Libyana and far behind Almadar Aljadeed, both owned by Libya's General Post and Telecommunications Company (GPTC). Subscription growth is slowing down, but two factors are keeping the market going: the launch of 3G services by Libyana is proving popular, and the liberalisation of the market announced at the beginning of the year is attracting interest from investors. Among them are Turkcell, which in its bid to expand to emerging markets is targeting North Africa and Central Asia, and Zain, which is trying to move away from Sub-Saharan Africa and could see North Africa as a good place to invest.
Tunisia’s mobile market continues to grow steadily (albeit with lower net additions as penetration is over 80%) thanks to the competition between its two operators: state-owned incumbent Tunisie Telecom and Orascom's subsidiary Tunisiana. However the picture will change dramatically next year with the entry of a new fixed and mobile operator. The winner of the bid was announced in June as France Telecom, in partnership with local company Divona. With a growing middle class and a large youth market, the demand for broadband services – be they fixed or mobile – should drive the market in the years to come.
Morocco is a healthy competitive market with a leading incumbent operator Maroc Telecom (with mobile subsidiary IAM) and two strong competitors: Meditel and Wana, a CDMA player which entered the mobile market in 2008. As in Egypt, and unlike most of Africa, the fixed and wireless sector is dynamic; in addition to 3G, broadband services are the main engine for growth in the country’s telecoms market.
Last but not least, Algeria is the 2nd largest market in the region, with healthy competition between incumbent Algerie Telecom, Orascom-owned Djezzy, and Wataniya-owned Nedjma. There are talks of a 4th licence, so the market should draw a lot of attention from investors and commentators alike in the near future. Algeria is the only country in the region not to have launched 3G services yet, so the mobile data opportunities remain to be tapped into. The market’s main players are already pumping their muscles to be on top of the competition, and they will all be represented at the upcoming North Africa Com congress in Cairo in October: Algerie Telecom Group’s President Director General Dr Benhamadi Moussa, Djezzy’s CEO Tamer El Mahdy (also group CTO of Orascom Telecom Holdings), and Wataniya Algeria’s CEO Joseph Ged will all give keynote contributions at the event to discuss their strategies and focus for the year to come. They will join representatives of all the main players in the market, including mobile operators (Mobinil, Vodafone Egypt, Tunisiana, Meditel Morocco), investors (Vivendi), ISPs (Mediatel Tunisia, TE Data Egypt), regulators (Egypt, Tunisia) and more.
The exceptional programme and the industry support for this year’s event show that North Africa is a region to watch in the coming months. I’ll give you an update after the event.