LONDON-The main trends in the Middle East wireless industry for the current year were highlighted back in March with calls from senior industry professionals for greater private-sector participation and the introduction of competition in this steadily expanding market.
Speaking at the plenary session of the recent MECOM 99 conference in Bahrain, Conference Chairman Rasheed Ashoor warned that as the WTO’s 2006 deadline draws nearer, “Governments will no longer be able to protect public-sector organizations through restricted licensing.” Although Ashoor commended the efforts of Bahrain and its GCC neighbors for encouraging private-sector participation in their telecommunications sectors, he stressed the need for this trend to continue.
“The GCC countries have made significant moves toward private-sector participation, but have they done enough, bearing in mind that the WTO agreement makes provision for a fully liberalized telecoms world by 2006?” Ashoor asked.
This line of thinking was carried on by the keynote speaker Rahman al-Yami, CEO of Saudi Telecommunications Co. (STC). Al-Yami accepted the need for regulatory bodies in the Middle East to work toward a framework that will facilitate private and international participation in the industry.
Leading the way in the push from a government-controlled market framework is Egypt’s private mobile operator, MobiNil. At the end of April, the company revealed it closed a deal with Fastlink, under which it has acquired a 20-percent share in the Jordanian mobile venture.
According to industry insiders, MobiNil has confirmed plans to fund further expansion in the region through an international share listing; negotiations were underway at press time.
Within Egypt, MobiNil still leads the way in terms of subscriber numbers, boasting around 275,000 at the end of May. Egypt’s second operator, Misrfone, is catching up, however, with 110,000 mobile customers at last count.
As with the rest of the mobile world, competition for the lion’s share of the cellular market is fierce in Egypt, with MobiNil announcing tariffs are now being cut by around 50 percent and connection charges and line rental rates also being lowered.
While privatization was also a key theme of Midcom 99 held in May in Abu Dhabi, the conference was used as a forum to call for greater development of the telecoms sector in some parts of the region.
While the Gulf region shows levels of development on a par with the world average, other parts of the Middle East fall short, said Sami al-Basheer, head of the International Telecommunication Union’s Regional Office for Arab States, at the opening session,
Many of the region’s operators are trying to address this gap between supply and demand. Operators such as STC in Saudi Arabia, STE in Syria and the General Telecommunication Organization in Oman have all recently issued contracts to install or expand their cellular networks.
Speaking at the MECOM conference, STC CEO al-Yami said STC aims to see the number of GSM lines in Saudi Arabia increase by some 500,000 by 2000.
Privatization moves
On the privatization front, countries such as Qatar, Egypt, Lebanon and Jordan lead the way in the move toward private participation in the mobile sector. Many Middle East countries, however, continue to drag their heels in this area. Most notable among the latter category are the North African operators in countries like Tunisia and Algeria.
Q-Tel, the Qatari operator, sold a 45-percent stake, valued at about US$742 million, in an initial public offering at the end of 1998. For the first time in the country’s history, the share offer was open to participation by international investors. Following its partial flotation, Q-Tel announced 16-percent profits in the first quarter of 1999. According to the company, growth of and demand for its GSM services have contributed to this. Revenues earned by the mobile side of Q-Tel’s operations are estimated to have seen a 12-percent rise.
In the rest of the Gulf states, unlike in Qatar, cellular operations remain firmly in government control.
In Lebanon, the telecommunications sector is widely tipped to undergo privatization in the near future as the country tries to address its significant budget deficit A special government committee has been established to research and oversee the process.
The Lebanese mobile market is indicative of trends in the region as a whole. With demand rising, the PTT is examining the logistics of setting up a third, possibly state-run, cellular operator to compete with existing operators LibanCell and Cellis. At the time of writing, the Lebanese government was inviting international firms to bid for the opportunity to offer consultancy services and to identify potential opportunities in the country’s mobile market.
Turkey is also caught up in the privatization bug that seems to be sweeping through the region. Following a series of delays last year, privatization looks set to move forward with the announcement from the country’s privatization administration that a 20-percent block sale, valued at around around US$2.8 billion, of Turk Telekom will go ahead.
The prospect of a stake in the company has attracted interest from several prospective international buyers, including SBC Communications and Telef
