North Africa Telecommunications Report Q2 2008

As we move on through 2008, the broad themes and issues affecting the North African telecoms sector remain in play. In Algeria, despite much talk throughout 2007, the privatisation of Algerie Telecom has still to take place, although the Ministry of Posts and Communications has assured potential investors that the sale will get underway during 2008. Despite the delays, we expect that foreign investor interest will remain strong; following on from France Telecom and Portugal Telecom, who both declared an interest in 2007, the UAE's Etisalat is the latest candidate to make its intentions known. This level of interest is not surprising. The Algerian fixed-line market remains distinctly under-developed and we see plenty of potential for the internet sector as incomes rise and the non-oil sector of the economy develops.

Furthermore, Algerie Telecom owns a mobile subsidiary, Mobilis, which has a reported 10mn subscribers at the end of 2007. Although growth in the mobile market has slowed down considerably, we still see room for expansion. Even when penetration rates reach 100%, which we forecast them to do by 2012, there is the possibility of upgrading over 35mn projected subscribers from prepaid services to postpaid contracts.

In Morocco, we have again highlighted the astounding growth of the fixed-wireless market, led by the country's third licensed operator Wana. In the space of just over six months (services were first launched in February 2007), the fixed-wireless sector has grown to account for almost half of the total fixed-line market at the end of September 2007, according to the latest figures released by the national regulator.

Furthermore, fixed-wireless services are making headway in the internet market, leading to a drop in the market share of incumbent Maroc Telecom's ADSL offering. We are encouraged by all these trends, demonstrating as they do the level of competition in the Moroccan market and the positive effect that service innovation can have on growth levels.

The same cannot really be said of Tunisia, where the fixed-line market remains a monopoly under Tunisie Telecom, which has only been partially privatised. The operator also dominates the mobile sector, facing competition only from Wataniya subsidiary Tunisiana. Nevertheless, growth in the mobile market was surprisingly strong during the first nine months of 2007 and we have upgraded our forecasts for the sector. We now foresee penetration of almost 100% by the end of 2012, although this could be given a boost should the government decide to go ahead with rumoured plans to license a new national operator.