LONDON-The market for mobile services in the Middle East continues to show strong growth, with the ever-increasing number of new cellular operators barely keeping pace with growing customer numbers. An eventful first-quarter 2001 has seen new network expansion projects, a host of new value-added services by several operators and new licenses issued, all indicating a market that testifies to the Middle East’s continuing love affair with the mobile phone.
In a recently issued report on the telecommunications sector in the Middle East, industry analysts predict that mobile subscriber numbers will pass the 28 million mark in the region by the end of 2004, a four-fold increase on the present figure of around 7 million cellular users. Israeli GSM operator Partner Communications, for example, began operations in January 1999 and already is tipped by analysts to post profits by early 2002. Partner Communications saw a 20-percent increase in subscriber numbers in quarter one compared with the same period in 2000.
In the Egyptian market, a combination of competition in the mobile sector and the introduction of prepaid services has seen subscriber numbers for both the country’s operators, MobiNil and ClickGSM, pass the 1 million mark. The total number of mobile subscribers in the Egyptian market stood at 2.3 million in March 2001. According to research by analyst firm Pyramid Research, MobiNil and ClickGSM are set to see their subscriber numbers increase to 4.585 million and 4.223 million respectively by 2004.
February saw MobiNil announce net profits of US$74.9 million for 2000, a 105-percent increase on the previous year. MobiNil’s revenues were in the region of US$529.3 million, representing a year-on-year increase of 41 percent. Rival ClickGSM, meanwhile, announced it will go ahead with an initial public offering (IPO) later in the year.
Bahrain is another Middle East market experiencing strong growth in the cellular sector. Bahraini incumbent Batelco has seen mobile penetration increase to 30 percent, around 205,000 subscribers, in the six years since it began offering cellular services. Batelco expects this figure to rise to 500,000 by the end of 2005.
Beyond voice
As the mobile market across the region matures, operators are increasingly realizing that basic mobile services and competitive pricing are no longer enough to maintain long-term customer loyalty. Gaining subscribers is currently all about offering value-added services. As mobile telephony enjoys greater penetration in the region, operators are increasingly in a position to begin offering additional services to their customers. More operators in the Middle East are looking into advanced services, such as the Wireless Application Protocol (WAP), mobile Internet and text-based services tailored to the Arab market.
Lebanese cellular operator, FTML Services Cellulaire Liban, also known as Cellis, announced it took delivery of a unified-messaging solution from Finland’s Tecnomen. The unified-messaging system has been deployed for commercial services, enabling FTML to offer customers Internet messaging, text-to-speech and speech-recognition services on top of basic voice services.
Egypt’s MobiNil, also with an eye to offering value-added services, has contracted Nokia to supply its General Packet Radio Service (GPRS) and WAP solutions as part of a network expansion project. Both MobiNil and ClickGSM began offering WAP services to customers this year, however, according to Pyramid Research, WAP uptake in Egypt is keeping with the slow pace of the rest of the Europe, Middle East and Africa (EMEA) region due to the high price and low availability of handsets. The forecast for the region’s GPRS services, mostly due to be introduced later this year, is more positive, the firm said.
Batelco, meanwhile, has seen strong uptake of its short message service (SMS) offering, first introduced two years ago, as well as its SimSim prepaid service. In Israel, using technology from Orsus Solutions, Bank Leumi-Israel’s oldest and second-largest bank-launched the country’s first wireless financial services portal, taking 18 personal banking services live in just three weeks.
WAP services have also recently been introduced by Batelco in Bahrain and by state-run operator Etisalat in the United Arab Emirates (UAE). Etisalat’s Ewap service, for instance, enables users to check e-mail, keep abreast with the latest news and sports, and receive traffic updates.
In Kuwait, wireless operator ArabTel is offering GPRS service as its chosen value-add. An announcement earlier this year revealed that ArabTel has installed a wireless vehicle location portal powered by WebTel, which enables tracking via any Internet-enabled PC.
New competitors
Network expansion by major Middle East mobile operators continues to be a trend in the region, and several new licenses have also been announced in the region during the first quarter of this year. Tunisia’s Telecommunications Ministry is set to issue a tender for a second GSM license to be awarded in July. The 15-year license, which comes with a five-year extension option, has roused interest from a number of international players, including Portugal Telecom and Egyptian operator Orascom Telecom. Meanwhile, Tunisia’s existing government-run mobile operator has set about increasing its network capacity to 400,000 subscribers by the end of 2001.
Two new licenses, each valid for a 15-year period, were issued in Yemen in January 2001. Sabaa-Fon, a consortium comprising Orascom Telecom, Al-Ahmar Group, Greece Hailascom Company and International Contractors Union Company, and Spacetel Yemen, a consortium led by Lebanese Investcom Holdings and the Omani Al-Zubair Group, purchased GSM 900 MHz licenses for around US$10 million each.
Sabaa-Fon was the first to deploy its network for commercial service in February, initially offering services in Sanaa and the surrounding area using infrastructure equipment supplied by Siemens.
Also investing in GSM infrastructure is neighboring Morocco, which saw its GSM subscriber numbers rise by 3 million in the 18 months to February 2001. Maroc Telecom awarded a contract to Motorola for replacement of its existing cellular network with the latest Motorola portfolio of GSM infrastructure products. The network is scheduled to become operational by the third quarter. Motorola infrastructure has already been installed in the north of the country, covering areas such as Tangiers, Fez, Tetouan, Meknes and large parts of Casablanca.
Lebanon is also due to see the arrival of a new GSM operator in the market. An announcement by Minister of Post and Telecommunications Jean-Louis Cordahi in February revealed that a new entity known as Liban Telecom is due to be formed by combining existing fixed-line operator Ogero with other state-held telecom units to create a single fixed-line operator. This new telco is also due to offer Internet and data services, as well as run a third GSM service in Lebanon.
Telecom Egypt is in the process of rolling out a third GSM network following an initial investment of US$5.44 million. The service is not expected to become operational until the fourth quarter.
