Arab Advisors Group
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On the eve of liberalization, Morocco's fixed line service stagnates: Is this bad or good news?
Tuesday, October 15, 2002

A newly released report from the Arab Advisors Group analyzes the aggressive "fixed to mobile substitution" phenomena at play in Morocco and its possible effects on the liberalization of the fixed services in the country.

October 15, 2002 -

Morocco is the first country in the Arab World to have witnessed a drop in its fixed lines market. Morocco's Telecommunications market has been on the vanguard of Arab markets considering the presence of competition in most of its sectors: GSM, Internet and VSAT. Nonetheless, the luster of the rapid growth in cellular services that duopoly competition and prepaid induced, is diminished by the very disappointing fixed line segment performance over the past two years.

A new report,"Morocco's fixed line service stagnates: Bad news for Morocco's imminent liberalization!", was released to the Arab Advisors Group's (www.arabadvisors.com) Strategic Research Service subscribers on October 9, 2002. The report shows that Morocco is lagging behind in its fixed services although there is no actual barrier to reach the PSTN usage level of either Jordan or Syria or Egypt, as an example.

"The monopoly conditions, and a focus on the GSM market by the monopoly operator, have resulted in negative growth even at low penetration rates: Between 1997 and 2001 the PSTN subscriber base decreased at a CAGR of -4% even though penetration was only 3.7% in 2001." Arab Advisors Group's analyst, Hala Baqain wrote in the report. "The current crisis in the PSTN market in Morocco is due to the attractive offers of the mobile operators. The growth in mainlines in Morocco continued until the entrance of the second GSM operator in 2000. In 1999, the number of mainlines grew at 5% while in 2000 the PSTN market witnessed a drop of 5% which continued in 2001 when it declined by a whopping 21%. This huge decline in the mainline subscribers can be explained by a substantial increase in the GSM subscriber base, where it grew at impressive rates of 585% in 2000 and 86% in 2001." Ms. Baqain added.

The 6-pages report fully analyzes the dynamics of the fixed to mobile migration in the country by examining the intricate issues of pricing as well as other inhibiting factors of PSTN growth such as the low level of Internet usage in the country. The Arab Advisors Group concludes that the Moroccan market can sustain a much higher penetration rate, and competition, but only if proper attention is paid to the cause of the current decline: Relatively high PSTN rates (that make GSM more feasible) and very low demand from Internet subscribers.

The Arab Advisors Group's team of analysts in the region has already produced close to 120 reports on the Arab World's communications markets. The reports can be purchased individually or received through an annual subscription to Arab Advisors Group's (www.arabadvisors.com) Strategic Research Service. To date, Arab Advisors Group has served more than 60 global and regional companies by providing reliable research analysis and forecasts of Arab communications markets to these clients.

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