04 March 2008
Morocco's telecoms sector is showing healthy progress, with both mobile and internet penetration rates growing. Nevertheless, insiders have said the market remains far from developed and prices may need to be lowered, and the competitive environment improved, before the country can establish a customer base with maximum profitability.
On February 22 Maroc Telecom (MT) reported a net income of around Dh8m ($1m) for 2007, up 19% compared to 2006. The company said this strong growth was due largely to its mobile phone operations and better cost management. It also announced its expectation for profit growth of over 9% in 2008 with an estimated sales growth of 7%.
Despite increasing levels of competition from its two main telecoms competitors, Wana and Meditel, MT announced a 23.4% rise in profit for its domestic operations. The company's results for its operations in Morocco serve as a strong endorsement of the sector's growth at large. The telecoms sector currently represents one of Morocco's leading recipients of foreign direct investment (FDI) with a 2006 turnover equal to 2.36bn euros, almost 7% of Morocco's GDP for the year.
The business climate in Morocco's telecoms market dramatically changed with the government-mandated liberalisation of the sector in 2005. While this initial free-market reform targeted the fixed-line segment, global licences were later awarded for mobile, internet and fixed-line services.
One of the most significant events in the sector has been the introduction of North Africa's first 3G mobile phone licences. Wana heightened the level of competition in the mobile segment in March 2007, when it introduced North Africa's first 3G+ service, also known as 3.5G, beating both Meditel and MT to market by nine months.
The new technology, which has now been embraced by all three of Morocco's main telecoms players, offers improved speeds and new services for consumers, as well as tremendous growth opportunity for providers. Mobile penetration reached 66% in 2007, up from 54% in 2006, according to local press.
Morocco has also seen strong performance in broadband connections and high-speed data transmission, though there remains significant room for growth. Currently, these services are utilised mainly by the country's corporate segment, in addition to its burgeoning IT sector. MT continues to hold a commanding share of this market, and Morocco's fixed-line loop system is currently only partially unbundled, requiring competitors to pay MT a rental fee. It is expected to be completely unbundled later in 2008.
To further expand the non-corporate segments of the internet market, MT's chairman of the board, Abdeslam Ahizoune, has called for a reduction in connection rates. This proposal is particularly aimed at broadening the country's home-user base.
At the conference to announce the company's financial results, Abdeslam Ahizoune, chairman of MT, reported that Morocco currently counted nearly 6m internet users, up 21.7% over 2006. Nevertheless, he said this was still far from reaching the sector's potential.
"It's small in my opinion," he said. "Growth of 21.7% is a lot for the corporate side but not for all of Morocco. It is necessary to lower the price." A reduction in internet connection fees would first require the blessing of Morocco's competition authority, he said, in addition to the consent of competitors Meditel and Wana.
"Maroc Telecom is ready to make sacrifices and take losses on the internet segment, because we must first create the market; later the margins will come," he said.
On the back of demand for internet connections, the number of fixed connections grew to 1.29m in 2007, up 1.8% on 2006, when it experienced a decrease. Morocco's National Agency for Telecommunication Regulation predicts significant growth for fixed-line's penetration in Morocco over the next decade due to improvements in technology that will encourage further demand.
Morocco's telecoms sector is showing healthy progress, with both mobile and internet penetration rates growing. Nevertheless, insiders have said the market remains far from developed and prices may need to be lowered, and the competitive environment improved, before the country can establish a customer base with maximum profitability.
On February 22 Maroc Telecom (MT) reported a net income of around Dh8m ($1m) for 2007, up 19% compared to 2006. The company said this strong growth was due largely to its mobile phone operations and better cost management. It also announced its expectation for profit growth of over 9% in 2008 with an estimated sales growth of 7%.
Despite increasing levels of competition from its two main telecoms competitors, Wana and Meditel, MT announced a 23.4% rise in profit for its domestic operations. The company's results for its operations in Morocco serve as a strong endorsement of the sector's growth at large. The telecoms sector currently represents one of Morocco's leading recipients of foreign direct investment (FDI) with a 2006 turnover equal to 2.36bn euros, almost 7% of Morocco's GDP for the year.
The business climate in Morocco's telecoms market dramatically changed with the government-mandated liberalisation of the sector in 2005. While this initial free-market reform targeted the fixed-line segment, global licences were later awarded for mobile, internet and fixed-line services.
One of the most significant events in the sector has been the introduction of North Africa's first 3G mobile phone licences. Wana heightened the level of competition in the mobile segment in March 2007, when it introduced North Africa's first 3G+ service, also known as 3.5G, beating both Meditel and MT to market by nine months.
The new technology, which has now been embraced by all three of Morocco's main telecoms players, offers improved speeds and new services for consumers, as well as tremendous growth opportunity for providers. Mobile penetration reached 66% in 2007, up from 54% in 2006, according to local press.
Morocco has also seen strong performance in broadband connections and high-speed data transmission, though there remains significant room for growth. Currently, these services are utilised mainly by the country's corporate segment, in addition to its burgeoning IT sector. MT continues to hold a commanding share of this market, and Morocco's fixed-line loop system is currently only partially unbundled, requiring competitors to pay MT a rental fee. It is expected to be completely unbundled later in 2008.
To further expand the non-corporate segments of the internet market, MT's chairman of the board, Abdeslam Ahizoune, has called for a reduction in connection rates. This proposal is particularly aimed at broadening the country's home-user base.
At the conference to announce the company's financial results, Abdeslam Ahizoune, chairman of MT, reported that Morocco currently counted nearly 6m internet users, up 21.7% over 2006. Nevertheless, he said this was still far from reaching the sector's potential.
"It's small in my opinion," he said. "Growth of 21.7% is a lot for the corporate side but not for all of Morocco. It is necessary to lower the price." A reduction in internet connection fees would first require the blessing of Morocco's competition authority, he said, in addition to the consent of competitors Meditel and Wana.
"Maroc Telecom is ready to make sacrifices and take losses on the internet segment, because we must first create the market; later the margins will come," he said.
On the back of demand for internet connections, the number of fixed connections grew to 1.29m in 2007, up 1.8% on 2006, when it experienced a decrease. Morocco's National Agency for Telecommunication Regulation predicts significant growth for fixed-line's penetration in Morocco over the next decade due to improvements in technology that will encourage further demand.
© Oxford Business Group 2008
