2008 Africa - Telecoms, Mobile and Broadband in Northern Region

Northern Africa is home to some of the most developed telecom markets on the continent. All countries in this group except for landlocked Chad have well developed fixed-line infrastructures and direct access to international submarine fibre optic cables. Most incumbent telcos in the region are already in private hands, but the privatisation of Algerie Telecom has been postponed in the wake of the global economic crisis, as has the licensing of a second fixed network operator in Egypt. Tunisia is planning to go ahead with its second fixed-line licence, joining Algeria, Morocco and Sudan, which already have two, and in the case of Morocco, three operators. Algeria, Egypt, Morocco and Tunisia have fast growing broadband markets, supported by some of the lowest ADSL prices in Africa and strong competition from wireless services. Commercial 3G mobile services have been launched in Egypt, Libya, Morocco, Sudan and Tunisia, with 3G licences expected to be issued in Algeria shortly. 

At around 85% penetration, the spectacular subscriber growth curve of Algeria’s mobile market is beginning to flatten and attention is shifting to maintaining or improving ARPU, which has continued to decline under the intense competition between three networks. The three mobile network operators have entered the lucrative underdeveloped Internet sector by launching mobile data services and will be able to offer true broadband services under 3G licences to be issued shortly. This upcoming competition is accelerating developments in the fixed and fixed-wireless access sector, where ADSL2+ and SHDSL are being rolled out as well as EV-DO and WiMAX wireless broadband services and one of Africa’s first FttH networks. In parallel, the national and international fibre optic backbone is being upgraded to an IP-based NGN to support converged services and the growing traffic load. An opportunity to enter the market exists for investors in the upcoming privatisation of Algerie Telecom, for which 45 bidders have shown interest. 

Despite being Africa’s newest exporter of oil, Chad has one of the least developed telecommunications market in the world. Penetration rates in all market sectors – fixed, mobile and Internet – are well below African averages. The country lacks a national backbone infrastructure to support efficient broadband services. In order to raise the capital needed to fund development of the network, the government is intent on privatising the national telco, Sotel Tchad. The mobile sector is growing fast under competition between two foreign-owned networks. Sotel Tchad is rolling out a CDMA fixed-wireless system that enables it to potentially enter the lucrative mobile sector as well, and the mobile operators have launched mobile data services in a bid to participate in the underdeveloped Internet sector. 

The licensing of Egypt’s second fixed network operator has been postponed by at least a year to 2009 as a result of the global financial crisis, but the process has received strong interest from international bidders. The incumbent’s fixed network rollout has slowed, but take-up of ADSL broadband services continues unabated. There will be a shift towards wireless technologies, following the first successful WiMAX deployments in the country. In addition, all three mobile networks have now launched 3G services and are set to become dominant players in the Internet and broadband market as well. An increasing demand for bandwidth has led to the development of several additional submarine fibre optic cable systems to go online from 2009. With mobile and broadband tariffs already among the lowest on the continent, operators will seek to streamline their operations and distinguish themselves from the competition by quality of service and introducing new services. 

Libya is emerging from almost two decades of economic isolation, which contributed to the stagnation of its oil industry, the mainstay of its economy, and invariably its telecoms sector. Despite having an old style monopoly player for the provision of posts and telecom services, the country’s telecom network is superior to those in most other African countries. The mobile sub-sector remained underdeveloped until the introduction of a second GSM network in 2004 which sent market penetration skyrocketing from one of the lowest in Africa to one of the highest within only two years. 3G mobile services have been launched and massive investments are being made into a next-generation national fibre optic backbone network, the expansion of ADSL and WiMAX broadband services, and new international fibre connections. Investments into telecommunications infrastructure totalling US$10 billion have been earmarked for the 15 years to 2020. 

Morocco is one of the most advanced telecommunications markets in Africa and often seen as a role model for future developments in other parts of the continent. It features a majority-privatised, highly profitable incumbent telco, three fixed and mobile network operators, as well as the highest penetration and some of the lowest prices on the continent for broadband Internet access. 2007 saw the introduction of 3G mobile broadband services, and within 18 months this sub-sector had taken almost a quarter of the broadband market. The boundaries between fixed and mobile are beginning to disappear as technologies and services converge. Innovative new services have been introduced such as the first commercial IPTV service on the continent. To accommodate the increasing amount of voice and Internet traffic, international connectivity and fibre optic national backbone networks are being expanded, and WiMAX is being rolled as the next-generation access technology. 

Sudan, the third largest oil producer in sub-Saharan Africa and one of the biggest countries on the continent, is regarded as one of Africa’s most lucrative telecom markets, receiving hundreds of millions of dollars in foreign investment per year. The privatisation of its incumbent mobile network fetched a record price. Enormous further potential exists since penetration rates are still relatively low in all market segments. Two fixed and three mobile networks are competing for customers, rolling out broadband and next-generation services. Under a recent peace agreement, the oil-rich south of the country, which has been beyond the central government’s control and deprived of development, is establishing its own independent telecommunications regime, creating new opportunities for service providers and equipment suppliers. 

Tunisia has one of the most developed telecommunications infrastructures in the relatively affluent North African region and sports some of the continent’s highest market penetration rates. The mobile sector has experienced exceptional growth since the introduction of competition in 2002. A nationwide fibre optic backbone and international access via submarine cables, coupled with some of the lowest broadband prices in Africa have supported rapid development of the Internet sector. The incumbent telco has been partially privatised, and the licensing of a second fixed-line operator is planned for 2009. 

Key highlights:

·         Fixed-line, mobile and Internet market forecasts to 2010 and 2015 for Algeria, Egypt and Morocco;

·         Mobile ARPU forecast to 2010 and 2015 for Egypt;

·         Fixed-line renaissance in Algeria and Morocco driven by competition and demand for broadband services;

·         Second fixed-line licence expected in Egypt and Tunisia;

·         3G mobile licences expected in Algeria while the privatisation of Algerie Telecom has been delayed;

·         3G mobile broadband attained a 25% share of Morocco’s broadband market in less than two years;

·         Major WiMAX rollouts in Algeria, Egypt, Libya, Morocco and Tunisia;

·         Algeria deploys first major FttH network in Africa;

·         Chad’s national backbone network relies entirely on satellites;

·         All major operators pushing into semi-autonomous Southern Sudan’s telecom vacuum;

·         Libya, the first country in continental Africa to reach 100% mobile market penetration, plans to invest US$10 billion into telecommunications infrastructure between 2005 and 2020.

Mobile subscribers and penetration rate in Libya – 1998 - 2008

(Source: BuddeComm based on ITU, Global Mobile and industry data)

For those needing high level strategic information and objective analysis on this region, this report is essential reading and gives further information on:

·         Government policies affecting the telecoms industry;

·         Market liberalisation;

·         Telecoms operators – privatisation, acquisitions, new licences and competition;

·         Internet and broadband development and growth;

·         The fast growing mobile markets of the region;

·         Average Revenue per User (ARPU);

·         Mobile application and content developments.

Data in this report is the latest available at the time of preparation and may not be for the current year.