Arab Advisors Group
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Arab communications markets on the threshold of unprecedented competition.
Thursday, October 18, 2001

The Arab World is poised for an array of telecommunications privatizations and liberalization milestones. New comprehensive reports from Arab Advisors Group examine and analyze the opportunities and market potential in Morocco, Lebanon, Saudi and Oman.

October 18, 2001 -
The Arab World is still a global laggard in introducing competition in its communications markets. Across the Arab Countries from the Atlantic Ocean to the Arabian Gulf, fixed services monopolies and a few GSM duopolies are the norm. The Arab countries, home to more than 250 million people, are yet to have truly liberalized communications sectors that will bring in what competition elsewhere brought: Better service, expanding bases of consumers of communications services and cost-based pricing (which in general means lower rates although it could mean higher local rates as cross subsidization of services is usually the first thing to go in a competitive market). Liberalized markets will also enhance global investor interest in the countries as opportunities attract international operator, vendors and finance.

"The picture varies markedly between the Arab countries", noted Jawad Abbassi, Arab Advisors Group President. "Morocco is the clear market leader in introducing liberalization followed by countries like Jordan, Egypt and Lebanon. The Gulf States are still monopoly countries with some level of competition in Kuwait (Internet and GSM) and Saudi Arabia (Internet)", Mr Abbassi said. "Clearly, countries that are facing economic hardships have been the leaders in recognize the role of telecommunications liberalization in attracting investments and upgrading their once-dilapidated communications infrastructure."
Morocco will be the first Arab country to have competition in the fixed services and international long distance service segments. A new research report by Arab Advisors Group entitled "Morocco Communications Projections Report-2001" details the impending opportunities in one of the larger Arab communications markets. The report was released to Arab Advisors Group Strategic Research Subscribers in October. Morocco's regulator, the ANRT, is in the process of launching a tender for a second PSTN license (that includes a datacomm and international gateway components). Morocco will therefore have PSTN and fixed services competition in 2002. ILD competition will also start in 2002 since the existing second GSM licensee, MédiTélécom, has the right to operate its own international exchange as of 2002. MédiTélécom's strategic owners include Spanish Telefonica and Portugal Telecom. Full ILD competition will start in 2003.
"Basic services competition will reinvigorate the Moroccan market" Hala Baqain, Arab Advisors Group's Morocco Analysts, said. "Between 2002 and 2006, the Arab Advisors Group projects the addition of close to a million new PSTN lines, as opposed to less than .25 million between 1997 and 2000." Baqain wrote in the report. The Morocco Communications Projections Report-2001 provide comprehensive analysis of the regulatory regimes and investment laws affecting the communications and Internet markets in Morocco. The report include five-year projections of more than 40 demographic, economic, telecom and Internet indicators, along with another five-year historical view. The report also details communications operators' profiles, services and strategies and detail opportunities in Morocco for vendors, investors and new operators.

Lebanon too is geared for liberalization and privatization action. The country is expected to have a modern WTO compatible telecom law in the coming short period. "This law will reform the telecom sector and will create a separate regulatory body and a telecom operator (Liban Telecom). It will also become the foundation of the required legal framework to privatize the sector and make all government involvement transparent and well defined." Wrote Sami Sunna', Arab Advisors Group's Lebanon analyst in "Lebanon Communications Projections Report -2001". A GSM tender will be underway in Lebanon before the end of the year and Liban Telecom is expected to launch the country's 3rd GSM network in 2002. "Lebanon is awakening to liberalization and privatization and that will surely attract regional and global attention" Sunna' said. "Nonetheless, we believe future investors will discount a "risk premium" from their tender offers because of the negative effects that the ongoing dispute between the government and FranceTelecom over abolishing the GSM BOT agreement have on the market." Sunna' added. The Arab Advisors Group also released "Lebanon Internet & Datacomm Landscape report -2001" alongside the projections report. The report analyses and examines Lebanon's thriving and quite competitive Internet and datacomm sectors.
Saudi Arabia's GSM growth has been hindered by a monopoly operator keen on maximizing revenues. The impending, and quite belated, introduction of prepaid GSM service in the Kingdom will take the growth curve to unprecedented levels. "The Arab Advisors Group expects the market to grow at an annual rate of 45% for the years 2000-2005. This substantial growth rate is attributed to the expected launch of prepay service, and the expected competition in the segment in 2003 as well as the introduction of lower cost-based rates and connection fees." Wrote Shahin Shahin, Arab Advisors Group Saudi Arabia Analyst in the report. Alongside this report, the Arab Advisors Group also released the "Saudi Arabia Internet & Datacomm Landscape report -2001".
Oman's government is also planning its own liberalization and privatization. Plans for partial privatization of OmanTel, the monopoly government owned operator, are still in the cards, although previous attempts were delayed because of negative global market sentiment. Arab Advisors Group expects Oman to be among the first Gulf Cooperation Council countries to introduce fixed services and ILD competition. "Oman's market still has quite a lot of potential because the monopoly operator has not been able to fully serve all the pent-up demand yet. Moreover, OmanTel datacomm services offerings are quite rudimentary which highlights the possible investment opportunities in the market", Sarah Alalul, Arab Advisors Group Oman analyst said. Arab Advisors Group will be releasing Oman Communication Projections Report 2001 and Oman Internet and Datacomm Landscape Report 2001 within the coming week.

Arab Advisors Group's Country Communications Projections Reports provide comprehensive analysis of the regulatory regimes and investment laws affecting the communications and Internet markets in each country. The reports include five-year projections of more than 40 demographic, economic, telecom and Internet indicators, along with another five-year historical view. Arab Advisors Group's communications projections reports detail communications operators' profiles, services and strategies and detail opportunities in the market for vendors, investors and new operators.
With the eight projections and landscape reports on Morocco, Oman, Lebanon and Saudi, Arab Advisors Group's raises to more than 50 the number of research reports and notes published to date on its Arab communications markets coverage area. Subscribers of Arab Advisors Group's Strategic Research Service receive all these reports as part of their subscription, which also includes access to the analysts who research the markets and write the reports. The reports tables of contents can be viewed on Arab Advisors Group web page.

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