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Morocco: Mobile Moment

17 March 2009

Maroc Telecom (MT) has long held a dominant share of Morocco's mobile market, but a new entrant will increase competition for the kingdom's subscribers. On February 4, the National Agency for the Regulation of Telecommunications (Agence Nationale de Réglementation des Télécommunications, ANRT ) announced that the third second-generation (2G) mobile licence had been awarded to Wana , a subsidiary of domestic conglomerate Omnium Nord Afrique (ONA).

Wana 's new 2G GSM licence, which pits it against current incumbents MT and Méditel, is only the latest addition to the company's telecoms portfolio that also includes a third generation (3G) licence awarded in 2006. Details on the exact amount of Wana 's bid have not yet been released, but both the ANRT and Wana have described it as a "significant investment". The new 15-year nationwide licence gives Wana access to a market that includes 22.82m mobile subscribers, according to figures published by the ANRT at the end of 2008.

Despite its late start, Wana will hope to take advantage of an undersaturdated market, which has a penetration rate of 74%, and entice subscribers with competitive technology and pricing.

ANRT announced the tender on October 30, 2008 as a measure to boost competition and bring down prices in the sector. Since its creation in 1998, after the amendment of the Post Office and Telecommunications Act (Law 24-96), the ANRT has been charged with modernising, regulating and supervising the telecoms sector, while implementing the law, which calls for increased competition to provide consumers with more choice and better products and services. MT , the formerly state-owned company, had a monopoly over the sector until liberalisation began in 1999.

MT remains a formidable competitor, with Vivendi, Europe's largest entertainment group, now holding a controlling 54% share in the company. According to the most recent figures released by the ANRT , Wana controls 1.17% of the market, while MT and Meditel have market shares of 65.62% and 33.21%, respectively.

Despite increased competition from the new entrant, MT has stated that it expects to build on its 2008 growth, predicting a revenue increase of more than 3% this year. On February 23, MT announced that its 2008 net profits rose 18.5% year-on-year, to Dh9.5bn (€857m), and that its consolidated earnings from operations were up 13.5%, to Dh13.9bn (€1.2bn), with revenue growing 7.2%, to Dh29.5bn (€2.6bn), mostly on the back of mobile customers.

As the telecommunications arm of ONA, Wana already has a strong foundation to build on. ONA is Morocco's biggest conglomerate, with broad interests such as banking, insurance, retailing and mining. Although Wana has been active in other segments of the telecoms market such as internet and fixed-line telephony, the new licence gives it access to one of the sector's most lucrative areas. The first mobile phone network, introduced in Rabat in 1989, had 700 subscribers, a figure that jumped to 3m by 2000. Mobile phone use has continued to rise and the current national penetration rate of 74% far exceeds ANRT 's growth prediction. A 2004 study forecast that it would take until 2014 to reach this level.

Despite the impressive subscriber growth to date, the government is doing even more to expand the reach of the kingdom's mobile phone network. In November 2006 the ANRT adopted the Programme for Universal Access to Telecommunications (PACT), which aims to connect some 2m people and 9200 remote villages by 2011. The programme extends to telephony and internet services. MT recently signed a Dh2.8bn (€252m) contract to connect more than 7000 towns and villages nationwide, which represents some 80% of the PACT programme.

Morocco's mobile expansion is part of a larger regional trend. Cell phone sales have proved resilient in the Middle East and Africa, and although the global financial crisis will likely lead to a contraction, purchases are projected to increase 14.77% from 176m units in 2008 to 202m units in 2009, as prices for handsets fall and more 3G networks are established.

For the kingdom, mobile telephony contributes significantly to the value of the telecoms sector as a whole. Its continued liberalisation is expected to increase the industry's proportion of GDP from 7% in 2008 to 10% in 2009. At a time when other sectors are facing declining demand, telecoms is a bright spot in Morocco's economy.

© Oxford Business Group 2009