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Morocco: Market moves

Mobile subscription penetration rates are rapidly approaching the 100% mark, making the segment the most dynamic of the Moroccan voice calls market. By comparison, fixed-line penetration languished at less than 12% as of September 2010.

Despite being the leading market segment, it is far from becoming saturated and witnessed major subscriber growth in 2010. According to the latest data from the National Agency for the Regulation of Telecommunications, mobile subscriptions grew by 21% between September 2009 and September 2010, reaching 30.5m (including 2G and 3G). This raised the penetration rate from 80.4% in September 2009 to 96.8% a year later. Growth continues to take place largely in the prepaid sector, which currently accounts for more than 96% of the market.

Each of the three mobile operators posted significant growth in subscribers in the period, but it was the rapid rise of the Inwi GSM service offered by new market entrant Wana , which is backed by ONA, the largest commercial conglomerate in the country, that attracted the most attention.

Wana 's mobile subscriber base almost quintupled in size between September 2009 and September 2010 to 3.09m, thanks to the launch of its GSM service in February 2010, which raised its market share from less than 3% to more than 10% in eight months. Prior to the launch of its GSM service the firm already had around a 2.5% share of the mobile market through its CDMA 3G mobile broadband service.

Wana and Meditel, the second-largest mobile provider, have also benefitted from moves last year to liberalise the market and reduce the dominance of Maroc Telecom . In 2010 Maroc Telecom saw its market share fell by approximately 14 percentage points, from 66.7% at the end of 2009 to 52.8% at the end of 2010. However, earnings are not guaranteed to rise directly in line with subscriber growth. Some of each operator's new customers are buying secondary SIMs in order to get the best call rates for contacts on different networks rather than using them as their primary mobile service.

The increased competition in the GSM sector seems set to drive prices down, which is good news for customers who currently pay a premium for mobile services compared to the wider region. A report by Jordan's Arab Advisors' Group, a consultancy and research company specialising in media and communications in MENA, found in November last year that Moroccan text messages were the most expensive in the Arab world.

Competition is also driving innovation as the three operators seek ways to make their services more attractive and increase call volume. Maroc Telecom announced plans in December to launch a service that will allow people in France, and later in Spain and Italy, to add money to the accounts of friends and family in Morocco using its prepaid Jawal service. This will effectively enable the company to tap into the significant volume of remittances sent by the Moroccan community in Western Europe.

Also in December, Maroc Telecom announced the launch of a new prepaid subscription plan that would include unlimited access to the music video catalogues of Universal Music and four MTV channels.

Such efforts are requiring significant ongoing investment, which has seen the major players seek various forms of financing and capital. Meditel announced its intention to raise Dh1.2bn (€106.6m) through a seven-year bond in January. The bond will part-finance the company's plans to invest Dh4.7bn (€417.3m) between 2010 and 2014.

France Telecom completed its €640m purchase of a 40% stake in the company in December, and has also announced plans to buy another 5% of the company this year and increase its stake to 49% by 2015.

Meditel intends to raise capital by floating a stake on the Casablanca Stock Exchange later in 2011, offering smaller investors a chance to take a share in the company, which is not currently listed. By contrast, in October 2010 the Moroccan government dropped its plans to sell an 8% share of Maroc Telecom on the stock market this year. Though the firm is already listed on the bourse the sale would have reduced the state's holdings to 22%.

With all three networks working hard to increase their market share, customers are likely to reap the benefits of new and improved mobile services and lower rates. Given the trend of using multiple SIM cards, reaching 100% penetration will be a milestone rather than an endpoint, while providers will be hoping that subscribers make full use of their phones as they look to recoup their investments. Going forward, continuing growth for the sector looks to be a good call.

© Oxford Business Group 2011