Arab Communications Markets

1
Arab Communications Markets

• Jawad Abbassi
• Jawad_at_arabadvisors.com

ITU Private Sector Cooperation Meeting in the
Arab Region Amman October 2003
2
Outline

• Communications and Internet situation in the Arab
  World
• The effects of liberalization and privatization
  on infrastructure and service availability
• The upcoming competitive landscape in Arab
  countries

3
A Regional Comparison
Country PSTN GSM Internet (Accounts)
Algeria 6.2 1.4 0.2
Bahrain 24.4 54.3 7.4
Egypt 11.4 6.6 0.3
Jordan 12.7 22.4 1.3
Kuwait 21.3 57.7 9.5
Lebanon 20.9 20.9 3.9
Morocco 3.4 20.8 0.2
Oman 10.2 16.5 2.5
Qatar 28.5 43.0 3.2
Saudi Arabia 15.1 22.8 2.6
Syria 11.9 2.3 0.4
Tunisia 11.7 5.5 0.8
UAE 29.1 64.7 8.3
Figures by end of 2002 Source Arab Advisors
Groups Reports
4
PSTN Penetration ()
5
GSM Penetration ()
6
Internet Accounts Penetration ()
7
A Regional Comparison
Country PSTN ARPU GSM ARPU Internet ARPU
Algeria 12 64
Bahrain 71 46 45
Egypt 15 22 8
Jordan 46 30 22
Kuwait 65 54 48
Lebanon 52 75 20
Morocco 36 14 8
Qatar 120 54 102
Saudi Arabia 71 73 22
Syria 16 70 13
Tunisia 33 42 14
UAE 56 51 31
Figures by end of 2002 Source Arab Advisors
Groups Reports
8
Regional GSM Subscriber Mix
Operator/Country Postpaid Prepaid
Space Tel -Syria 100 0
Syria Tel - Syria 100 0
STC Saudi Arabia 57 43
Q-TEL - Qatar 49 51
MTC Vodafone - Kuwait 41 59
Orascom Telecom Algeria 33 (March 2003) 67 (March 2003)
Fastlink Jordan 30 70
Batelco Bahrain 22 78
MobiNil - Egypt 20 80
MobileCom - Jordan 20 80
Tunisie Telecom (Tunicell) 20 80
Vodafone Egypt 16 (March 2003) 84 (March 2003)
MediTel - Morocco 7 93
Wataniya - Kuwait 6 94
Jawwal - Palestine 6 94
Figures by end of 2002 unless
indicated otherwise Source Arab Advisors
Groups Report A KPI Scorecard of Arab Telecom
Operators June 2003
9
Global PSTN Status
Source Arab Advisors Groups Report A KPI
Scorecard of Arab Telecom Operators June 2003
10
Global GSM Status
Source Arab Advisors Groups Report A KPI
Scorecard of Arab Telecom Operators June 2003
11
Global Internet Use Status
12
Mobiles and Mainlines

• When Mobiles exceeded / will exceed PSTN lines
• Bahrain, Kuwait, Morocco and UAE in 2000
• Jordan, Lebanon, Oman and Qatar in 2001
• Saudi Arabia in 2002
• Tunisia, expected in 2003
• Algeria, expected in 2004
• Syria, expected in 2007

Source Arab Advisors Groups A Comparative
Analysis of the Cellular and Mainlines Markets in
the Arab World October 2002
Source Operators, Arab Advisors Group
13
Mainlines Market Share Index
Country Share of the Population Share of PSTN Market Index
Algeria 15.90 9.30 0.58
Bahrain 0.36 0.84 2.31
Egypt 34.40 36.96 1.07
Jordan 2.69 3.22 1.20
Kuwait 1.14 2.30 2.01
Lebanon 1.93 3.82 1.98
Morocco 15.06 4.89 0.32
Oman 1.35 1.31 0.97
Qatar 0.31 0.84 2.70
Saudi 11.10 15.82 1.43
Syria 8.91 10.01 1.12
Tunisia 4.95 5.47 1.11
UAE 1.89 5.22 2.76

• Figures by end of 2002
• Index Share of PSTN Market/ Share of
  Population
• Source Arab Advisors Groups Reports

14
Cellular Market Share Index
Country Share of the Population Share of GSM Market Index
Algeria 15.90 1.86 0.1
Bahrain 0.36 1.63 4.5
Egypt 34.40 18.82 0.5
Jordan 2.69 4.98 1.9
Kuwait 1.14 5.46 4.8
Lebanon 1.93 3.34 1.7
Morocco 15.06 25.91 1.7
Oman 1.35 1.86 1.4
Qatar 0.31 1.12 3.6
Saudi 11.10 20.93 1.9
Syria 8.91 1.67 0.2
Tunisia 4.95 2.27 0.5
UAE 1.89 10.15 5.4

• Figures by end of 2002
• Index Share of GSM Market/ Share of
  Population
• Source Arab Advisors Groups Reports

15
Arab Advisors IVCU Index
Country IVCU Index Share of Circuits share of minutes
Kuwait 0.63 4.5 7.1
Saudi Arabia 0.87 29.6 33.9
UAE 1.12 23.4 20.9
Oman 0.98 3.9 4.0
Jordan 2.05 6.5 3.2
Syria 2.68 7.2 2.7
Lebanon 0.44 5.3 12.1
Egypt 1.28 16.4 12.8
A total of 64.1 K circuits and 5.38 billion
minutes International Voice Circuits
Utilization (IVCU) Index. Source Arab
Advisors - International Connectivity in the Arab
World
16
Advanced Services Availability
Operator / Country GPRS MMS
Algerie Telecom Mobile No No
Batelco Bahrain Yes Yes
MobiNil - Egypt Yes Yes
Vodafone Egypt - Egypt Yes Yes
Fastlink - Jordan Yes Yes
MobileCom - Jordan Yes Yes
Wataniya Kuwait Yes Yes
MTC Vodafone Kuwait Yes Yes
Cellis - Lebanon Yes No
LibanCell - Lebanon Yes No
Maroc Telecom Yes Yes
Qatar Q-Tel Yes No
Saudi Arabia - STC No No
SyriaTel - Syria No No
Tunisie Telecom -Tunisia Yes No
Tunisiana - Tunisia No No
UAE Etisalat Yes Yes
17
Intl Connectivity Operators

• Two major international submarine fiber optic
  cables and three satellite operators
• Arabsat
• Intelsat
• Inmarsat
• SEA-ME-WE
• FLAG

18
Regional Internet Bandwidth Capacity Index
Country Accounts share of Accounts Internet Bandwidth Capacity share of bandwidth Regional bandwidth index
Egypt 220,000 14.16 645 18.90 1.33
Jordan 71,000 4.57 225 6.59 1.44
Lebanon 150,000 9.66 135 3.96 0.41
Morocco 60,000 3.86 310 9.08 2.35
Oman 66,000 4.25 197 5.77 1.36
Qatar 20,000 1.29 155 4.54 3.53
Saudi Arabia 581,200 37.42 645 18.90 0.51
Syria 75,000 4.83 16 0.47 0.1
UAE 310,000 19.96 1,085 31.79 1.59
Source ArabAdvisors Group
19
Regional Utilized Internet Bandwidth Index
Country Accounts Share of Accounts Internet Bandwidth Capacity Share of Bandwidth Regional Bandwidth Index
Egypt 220,000 14.73 450 21.70 1.47
Jordan 71,000 4.75 90 4.34 0.91
Lebanon 150,000 10.05 60 2.89 0.29
Morocco 60,000 4.42 38 1.83 0.41
Oman 66,000 1.34 38 1.83 1.37
Qatar 20,000 38.92 297 14.32 0.37
Saudi Arabia 581,200 5.02 16 0.77 0.15
Syria 75,000 20.76 1,085 52.31 2.52
UAE 310,000 14.73 450 21.70 1.47
Source ArabAdvisors Group
20
Competition in the Region?
Country PSTN GSM Internet Datacomm
Kuwait Monopoly Duopoly Competitive Competitive
Saudi Arabia Monopoly Monopoly Competitive Monopoly
Qatar Monopoly Monopoly Monopoly Monopoly
Bahrain Monopoly Duopoly Monopoly Monopoly
UAE Monopoly Monopoly Monopoly Monopoly
Oman Monopoly Monopoly Monopoly Monopoly
Jordan Monopoly Duopoly Competitive Competitive
Syria Monopoly Duopoly Controlled Duopoly Monopoly
Lebanon Monopoly Duopoly Competitive Competitive
Egypt Monopoly Duopoly Competitive Competitive
Morocco Monopoly Duopoly Competitive Monopoly
Libya Monopoly Monopoly
Algeria Monopoly Duopoly Competitive
Tunisia Monopoly Duopoly Competitive Monopoly
Source Arab Advisors Groups Reports
21
Why is Competition Important?

• Better and more responsive service
• Expanding bases of consumers of communications
  services
• Cost-based pricing (tariff rebalancing, which
  could mean lower or higher rates)
• Enhance global investor interest and create
  employment

22
Upcoming liberalization plans

• Bahrain
• Second mobile license granted in April 2003
• Internet competition before the end of the year
• Second fixed line operator (including ILD)
  expected by 2005
• Egypt
• Full competition (i.e. a third GSM operator) by
  2005
• Second fixed line operator (including ILD)
  expected by 2006

23
Upcoming liberalization plans

• Jordan
• iDEN operator to be launched in 2004
• A third GSM operator in 2004
• Second fixed line operator (including ILD) by
  2005
• Kuwait
• Full competition (i.e. a third GSM operator)
  expected by 2005-2006
• Second fixed line operator (including ILD)
  expected by 2005-2006

24
Upcoming liberalization plans

• Algeria
• A second fixed line operator (including ILD)
  expected in 2004
• Third GSM operator expected in 2004
• Tunisia
• Second fixed line operator expected in 2004

25
Upcoming liberalization plans

• Lebanon
• A third GSM operator expected in 2004
• Second fixed line operator (including ILD)
  expected after 2005
• Morocco
• The first to introduce ILD competition in the
  region. Two Radio Trunking operators.
• Expected to be the first to grant a second fixed
  line license in 2003/2004. Delays and one failed
  attempt

26
Upcoming liberalization plans

• Qatar
• Second GSM operator expected by 2005
• No clear timeline for a second fixed line
  operator (including ILD)
• Saudi Arabia
• STC partially privatized 30 in January 2003
• Second GSM license during the last quarter in
  2004
• Second fixed line operator in 2008

27
Upcoming liberalization plans

• UAE
• Duopoly of GSM market expected by end of 2005
• Second fixed line operator (including ILD)
  expected by 2005
• Oman
• Duopoly of GSM market expected in 2005

28
Upcoming liberalization plans

• Syria
• No second fixed line operator, nor third mobile
  operator expected in the coming four years
• Iraq
• Competition of GSM market expected by 2004
• (Results of tender for 3 licenses should be
  issued by end of September 2003)
• Palestine
• Jawwals license ends in 2003. Still no tender
  for a second operator.
• PalTel has a 20 year license, which expires in
  2015.

29
Global Telecom Operators in the MENA Region
Foreign Investor Investment in Ownership Country
Cable Wireless Batelco 20 Bahrain
Vodafone Vodafone- Egypt 67 Egypt
France Telecom Jordan Telecom 31 Jordan
Orange ECMS-MobiNil 36.3 of ECMS 71.25 of MobiNil Egypt
Vivendi Universal Marco Telecom 35 Morocco
Telefonica MediTel 30.5 Morocco
Portugal Telecom MediTel 30.5 Morocco
30
Regional Operators
Operator Shareholder in Country of Operation
Orascom Telecom Holding Egypt MobiNil Mobilink Orascom Telecom Algeria Orascom Telecom Tunisia Telecel Libertis Tchad Moile Egypt Pakistan Algeria Tunisia AfricaCongo Brazzavile Chad
Batelco Bahrain QualityNet WLL Soficom Communications SAE Batelco Jordan Batelco Jeraisy company Ltd Kuwait Egypt Jordan Saudi Arabia
31
Regional Operators
Operator Shareholder in Country of Operation
Wataniya -Kuwait Orascom Telecom Tunisia Tunisia
MTC Vodafone Kuwait Thuraya Satellite System Fastlink International Jordan
Maroc Telecom - Morocco Mauritel Mauritania
Etisalat - UAE Thuraya Satellite System Sudatel International
32
The Lost Golden Years

• The GSM license fees as cash cows for a few Arab
  governments
• 1998-2000 were the years of massive telecom
  license valuations Some Arab countries benefited
  (Egypt, Morocco), others lost the chance (Oman,
  Egypt, Lebanon, Jordan, etc.)
• Markets remain growth markets and profitable.
  Much less hyped however!

33
Enabling Proper Competition

• Policy on local loop unbundling (or
  infrastructure-based competition)
• Tariff rebalancing
• Phasing out of cross subsidization (VoIP
  termination example)
• Transparent and strong regulators
• A courageous judiciary
• The possible role of GSM operators in
  spearheading full competition

34
Arab Advisors Group

• Arab Advisors Group provides reliable research,
  analysis and
• forecasts of Arab communications, media and
  technology
• markets.
• This presentation draws from around 180 reports
  published
• by Arab Advisors Groups team.
• Arab Advisors Group consulting service has served
  new
• telecom ventures in the Arab World whose
  investments in
• Arab Telecom markets will exceed One billion US.
• www.arabadvisors.com
• Tel [phone]
• Fax [phone]
• arabadvisors_at_arabadvisors.com