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Pyramid: Three's a Crowd in Morocco

Paul Rainford
8/11/2010
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All sectors of the Moroccan telecom market will become increasingly competitive in the next five years, with incumbent Maroc Telecom struggling to maintain market share.

That is one of the conclusions of a new study from Pyramid Research , "Morocco: New Mobile Competitors Boost Market Share," which is part of the Africa & Middle East Country Intelligence Reports series.

The report comes as Orange (NYSE: FTE) announces it is in talks to buy a stake in Morocco’s second-largest operator, Médi Télécom S.A. (Méditel) , with rumors of a 40 percent share carrying a price tag of €650 million (US$850.7 million). (See Euronews: August 10.) According to the report’s author, Mehdi Ben Said, Maroc Telecom’s share of overall revenue will decrease by 13 percent over the next five years, reaching 59.6 percent by 2015. This is despite a concerted effort by the incumbent to focus on high ARPS (average revenue per subscriber) and business customers by offering competitive international calling rates and prepaid bundles that are hardly any more expensive than those offered to postpaid subscribers.

Ben Said doubts whether Maroc Telecom can do much to halt the decline: “I don’t see a big change in strategy but maybe they need to re-shape their marketing offer. They could focus more on value packages.”

The chief beneficiary of Maroc Telecom’s decline, says the report, will be Wana, which has been something of a telecom phenomenon since its arrival on the scene as a fixed wireless and limited mobility CDMA operator in 2007. Within two years of service launch, Wana has garnered almost 66.3 percent of the fixed market, largely by attracting subscribers through free online and cheap offline calls.

In early 2009, however, Wana acquired its GSM license, and Pyramid now expects Wana to focus its efforts on its GSM offer. Indeed, only four months after launching its Inwi GSM-based service, Wana has notched up 1 million mobile customers.

“They [Wana] grew up quite fast in a couple of months. So far it’s been doing good and I don’t see why the trend would change,” says Ben Said.

The third player in the Moroccan market, Méditel, is also predicted to make gains, with investment from its relatively new Moroccan owners -- who bought out the shares of Telefónica and PT -- boosting the company’s performance on both the mobile and fixed side. The report forecasts Méditel’s revenue will reach $1.1 billion by 2015, up from $877 million in 2010.

But the fate of Méditel at present lies largely in the hands of France Telecom. What effect does Ben Said think France Telecom’s deal, assuming it goes ahead, will have on the Moroccan telecom market? “If this investment happens, I don’t see an immediate impact -- at least not at the beginning -- because Méditel is trying to secure its market share and stabilize it, leaving the battle mainly between Wana and Maroc Telecom. It will depend on what strategy France Telecom chooses to deploy within Méditel -- whether it’s going to inject enough cash to create a 4G infrastructure, for example.”

Ben Said believes it is unlikely that a fourth operator will enter what is already a fiercely competitive fray. There is space, however, for vendors to make serious money. “The opportunity is there either for the hardware manufacturers such as Huawei or Ericsson or for mobile handset manufacturers, because the 3G market is booming. In two years' time you probably won’t find any 2G handsets, and even the 2.5G handset market share is really decreasing.”

— Paul Rainford, freelance editor, special to Light Reading

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