Arab Communications

Markets

Jawad AbbassiJawad@arabadvisors.com

ITU Private Sector Cooperation Meeting in the Arab Region – AmmanOctober 2003

Outline

Communications and Internet situation in the Arab World

The effects of liberalization and privatization on infrastructure and service availability

The upcoming competitive landscape in Arab countries

A Regional ComparisonCountry PSTN % GSM % Internet (Accounts) % Algeria 6.2% 1.4% 0.2%Bahrain 24.4% 54.3% 7.4%Egypt 11.4% 6.6% 0.3%Jordan 12.7% 22.4% 1.3%Kuwait 21.3% 57.7% 9.5%Lebanon 20.9% 20.9% 3.9%Morocco 3.4% 20.8% 0.2%Oman 10.2% 16.5% 2.5%Qatar 28.5% 43.0% 3.2%Saudi Arabia 15.1% 22.8% 2.6%Syria 11.9% 2.3% 0.4%Tunisia 11.7% 5.5% 0.8%UAE 29.1% 64.7% 8.3%

*Figures by end of 2002Source: Arab Advisors Group’s Reports

0%

5%

10%

15%

20%

25%

30%

35%

UAEQata

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ain

Leba

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Kuwait

J ord

anSa

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Libya

Tunisi

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Algeria

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Moroc

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2000 2002

PSTN Penetration (%)

0%

10%

20%

30%

40%

50%

60%

70%2000 2002

GSM Penetration (%)

Internet Accounts Penetration (%)

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Kuwait UAE

Bahra

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Leba

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Qatar

Saud

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Oman

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Tunis

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Moroc

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Algeria

2000 2002

A Regional ComparisonCountry PSTN ARPU $ GSM ARPU $ Internet ARPU $

Algeria 12 64Bahrain 71 46 45Egypt 15 22 8Jordan 46 30 22Kuwait 65 54 48Lebanon 52 75 20Morocco 36 14 8Qatar 120 54 102Saudi Arabia 71 73 22Syria 16 70 13Tunisia 33 42 14UAE 56 51 31

** Figures by end of 2002Source: Arab Advisors Group’s Reports

Regional GSM Subscriber MixOperator/Country Postpaid % Prepaid %Space Tel -Syria 100% 0%Syria Tel - Syria 100% 0%STC – Saudi Arabia 57% 43%Q-TEL - Qatar 49% 51%MTC Vodafone - Kuwait 41% 59%Orascom Telecom Algeria 33% (March 2003) 67% (March 2003)Fastlink – Jordan 30% 70%Batelco – Bahrain 22% 78%MobiNil - Egypt 20% 80%MobileCom - Jordan 20% 80%Tunisie Telecom (Tunicell) 20% 80%Vodafone Egypt 16% (March 2003) 84% (March 2003)MediTel - Morocco 7% 93%Wataniya - Kuwait 6% 94%Jawwal - Palestine 6% 94%

** Figures by end of 2002 unless indicated otherwise Source: Arab Advisors Group’s Report “A KPI Scorecard

of Arab Telecom Operators” – June 2003

Global PSTN Status

Source: Arab Advisors Group’s Report “A KPI Scorecard of Arab Telecom Operators” – June 2003

PSTN %

0%10%20%30%40%50%60%70%80%

Global GSM Status

Source: Arab Advisors Group’s Report “A KPI Scorecard of Arab Telecom Operators” – June 2003

GSM %

0%

10%

20%

30%

40%

50%

60%

70%

80%

Algeria

Argenti

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Bahrai

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Canad

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France

German

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Leban

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Morocco

OmanQata

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Saud

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ia

South

Afric

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riaTun

isia UAE

United

Kingd

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United

State

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Global Internet Use StatusInternet Users %

0%

10%

20%

30%

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60%

Mobiles and MainlinesWhen Mobiles exceeded / will exceed PSTN lines:

– Bahrain, Kuwait, Morocco and UAE in 2000– Jordan, Lebanon, Oman and Qatar in 2001– Saudi Arabia in 2002– Tunisia, expected in 2003– Algeria, expected in 2004– Syria, expected in 2007

Source: Arab Advisors Group’s “A Comparative Analysis of the Cellular and Mainlines Markets in the Arab World” – October 2002

Mainlines Market Share Index Country % Share of the

Population% Share of

PSTN MarketIndex*

Algeria 15.90% 9.30% 0.58 Bahrain 0.36% 0.84% 2.31 Egypt 34.40% 36.96% 1.07 Jordan 2.69% 3.22% 1.20 Kuwait 1.14% 2.30% 2.01 Lebanon 1.93% 3.82% 1.98 Morocco 15.06% 4.89% 0.32 Oman 1.35% 1.31% 0.97 Qatar 0.31% 0.84% 2.70 Saudi 11.10% 15.82% 1.43 Syria 8.91% 10.01% 1.12 Tunisia 4.95% 5.47% 1.11 UAE 1.89% 5.22% 2.76

** Figures by end of 2002

•Index= % Share of PSTN Market/% Share of Population Source: Arab Advisors Group’s Reports

Cellular Market Share Index Country % Share of the

Population% Share of GSM

MarketIndex*

Algeria 15.90% 1.86% 0.1Bahrain 0.36% 1.63% 4.5Egypt 34.40% 18.82% 0.5Jordan 2.69% 4.98% 1.9Kuwait 1.14% 5.46% 4.8Lebanon 1.93% 3.34% 1.7Morocco 15.06% 25.91% 1.7Oman 1.35% 1.86% 1.4Qatar 0.31% 1.12% 3.6Saudi 11.10% 20.93% 1.9Syria 8.91% 1.67% 0.2Tunisia 4.95% 2.27% 0.5UAE 1.89% 10.15% 5.4

** Figures by end of 2002

•Index= % Share of GSM Market/% Share of Population Source: Arab Advisors Group’s Reports

Arab Advisors IVCU IndexCountry IVCU* Index % Share of

Circuits% share of minutes

Kuwait 0.63 4.5% 7.1%Saudi Arabia 0.87 29.6% 33.9%UAE 1.12 23.4% 20.9%Oman 0.98 3.9% 4.0%Jordan 2.05 6.5% 3.2%Syria 2.68 7.2% 2.7%Lebanon 0.44 5.3% 12.1%Egypt 1.28 16.4% 12.8%

A total of 64.1 K circuits and 5.38 billion minutes* International Voice Circuits Utilization (IVCU) Index. Source: Arab Advisors - International Connectivity in the Arab World

Advanced Services AvailabilityOperator / Country GPRS MMSAlgerie Telecom Mobile No NoBatelco – Bahrain Yes YesMobiNil - Egypt Yes YesVodafone Egypt - Egypt Yes YesFastlink - Jordan Yes YesMobileCom - Jordan Yes YesWataniya – Kuwait Yes YesMTC Vodafone – Kuwait Yes YesCellis - Lebanon Yes NoLibanCell - Lebanon Yes NoMaroc Telecom Yes YesQatar – Q-Tel Yes NoSaudi Arabia - STC No NoSyriaTel - Syria No NoTunisie Telecom -Tunisia Yes NoTunisiana - Tunisia No NoUAE – Etisalat Yes Yes

Int’l Connectivity Operators Two major international submarine fiber optic

cables and three satellite operators – Arabsat – Intelsat – Inmarsat – SEA-ME-WE – FLAG

Regional Internet Bandwidth Capacity Index

Country Accounts % share of Accounts

Internet Bandwidth Capacity

% share of bandwidth

Regional bandwidth index+

Egypt 220,000 14.16% 645 18.90% 1.33Jordan 71,000 4.57% 225 6.59% 1.44Lebanon 150,000 9.66% 135 3.96% 0.41Morocco 60,000 3.86% 310 9.08% 2.35Oman 66,000 4.25% 197 5.77% 1.36Qatar 20,000 1.29% 155 4.54% 3.53Saudi Arabia 581,200 37.42% 645 18.90% 0.51Syria 75,000 4.83% 16 0.47% 0.1UAE 310,000 19.96% 1,085 31.79% 1.59Source: ArabAdvisors Group

Regional Utilized Internet Bandwidth Index

Country Accounts % Share of

Accounts

Internet Bandwidth Capacity

% Share of

Bandwidth

Regional Bandwidth

Index+

Egypt 220,000 14.73% 450 21.70% 1.47Jordan 71,000 4.75% 90 4.34% 0.91Lebanon 150,000 10.05% 60 2.89% 0.29Morocco 60,000 4.42% 38 1.83% 0.41Oman 66,000 1.34% 38 1.83% 1.37Qatar 20,000 38.92% 297 14.32% 0.37Saudi Arabia 581,200 5.02% 16 0.77% 0.15Syria 75,000 20.76% 1,085 52.31% 2.52UAE 310,000 14.73% 450 21.70% 1.47Source: ArabAdvisors Group

Competition in the Region?Country PSTN GSM Internet DatacommKuwait Monopoly Duopoly Competitive CompetitiveSaudi Arabia Monopoly Monopoly Competitive MonopolyQatar Monopoly Monopoly Monopoly MonopolyBahrain Monopoly Duopoly Monopoly* MonopolyUAE Monopoly Monopoly Monopoly MonopolyOman Monopoly Monopoly Monopoly MonopolyJordan Monopoly Duopoly Competitive CompetitiveSyria Monopoly Duopoly Controlled Duopoly MonopolyLebanon Monopoly Duopoly Competitive CompetitiveEgypt Monopoly Duopoly Competitive CompetitiveMorocco Monopoly Duopoly Competitive MonopolyLibya Monopoly MonopolyAlgeria Monopoly Duopoly CompetitiveTunisia Monopoly Duopoly Competitive Monopoly

Source: Arab Advisors Group’s Reports

Why is Competition Important?

Better and more responsive service

Expanding bases of consumers of communications services

Cost-based pricing (tariff rebalancing, which could mean lower or higher rates)

Enhance global investor interest and create employment

Upcoming liberalization plansBahrain Second mobile license granted in April 2003 Internet competition before the end of the year Second fixed line operator (including ILD) expected by

2005

Egypt Full competition (i.e. a third GSM operator) by 2005 Second fixed line operator (including ILD) expected by

2006

Upcoming liberalization plansJordan iDEN operator to be launched in 2004 A third GSM operator in 2004 Second fixed line operator (including ILD) by 2005

Kuwait Full competition (i.e. a third GSM operator) expected by

2005-2006 Second fixed line operator (including ILD) expected by

2005-2006

Upcoming liberalization plansAlgeria A second fixed line operator (including ILD) expected in

2004 Third GSM operator expected in 2004

Tunisia Second fixed line operator expected in 2004

Upcoming liberalization plansLebanon A third GSM operator expected in 2004 Second fixed line operator (including ILD) expected after

2005

Morocco The first to introduce ILD competition in the region. Two

Radio Trunking operators. Expected to be the first to grant a second fixed line

license in 2003/2004. Delays and one failed attempt

Upcoming liberalization plansQatar Second GSM operator expected by 2005 No clear timeline for a second fixed line operator

(including ILD)

Saudi Arabia STC partially privatized 30% in January 2003 Second GSM license during the last quarter in 2004 Second fixed line operator in 2008

Upcoming liberalization plansUAE Duopoly of GSM market expected by end of 2005 Second fixed line operator (including ILD) expected by

2005

Oman Duopoly of GSM market expected in 2005

Upcoming liberalization plansSyria No second fixed line operator, nor third mobile operator expected

in the coming four yearsIraq Competition of GSM market expected by 2004 (Results of tender for 3 licenses should be issued by end of

September 2003)Palestine Jawwal’s license ends in 2003. Still no tender for a second operator. PalTel has a 20 year license, which expires in 2015.

Global Telecom Operators in the MENA Region

Foreign Investor Investment in Ownership Country

Cable & Wireless Batelco 20% BahrainVodafone Vodafone- Egypt 67% Egypt

France Telecom Jordan Telecom 31% JordanOrange ECMS-MobiNil 36.3% of ECMS

71.25% of MobiNilEgypt

Vivendi Universal Marco Telecom 35% MoroccoTelefonica MediTel 30.5% MoroccoPortugal Telecom MediTel 30.5% Morocco

Regional Operators Operator Shareholder in Country of

Operation

Orascom Telecom Holding – Egypt

MobiNil MobilinkOrascom Telecom Algeria Orascom Telecom TunisiaTelecelLibertisTchad Moile

EgyptPakistanAlgeriaTunisiaAfricaCongo Brazzavile Chad

Batelco – Bahrain QualityNet WLL Soficom Communications SAE Batelco JordanBatelco Jeraisy company Ltd

KuwaitEgyptJordanSaudi Arabia

Regional Operators Operator Shareholder in Country of OperationWataniya -Kuwait Orascom Telecom Tunisia TunisiaMTC Vodafone – Kuwait

Thuraya Satellite SystemFastlink

International Jordan

Maroc Telecom - Morocco

Mauritel Mauritania

Etisalat - UAE Thuraya Satellite SystemSudatel

International

The Lost Golden Years The GSM license fees as cash cows for a few

Arab governments

1998-2000 were the years of massive telecom license valuations: Some Arab countries benefited (Egypt, Morocco), others lost the chance (Oman, Egypt, Lebanon, Jordan, etc.)

Markets remain growth markets and profitable. Much less hyped however!

Enabling Proper Competition Policy on local loop unbundling (or infrastructure-

based competition) Tariff rebalancing Phasing out of cross subsidization (VoIP

termination example) Transparent and strong regulators A courageous judiciary The possible role of GSM operators in

spearheading full competition

Arab Advisors GroupArab Advisors Group provides reliable research, analysis andforecasts of Arab communications, media and technologymarkets.

This presentation draws from around 180 reports publishedby Arab Advisors Group’s team.

Arab Advisors Group consulting service has served newtelecom ventures in the Arab World whose investments inArab Telecom markets will exceed One billion US$.

www.arabadvisors.comTel: 962.6.5828849Fax: 962.6.5828809

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