Morocco: Ongoing expansion in the mobile segment
Like many other emerging markets around the world, mobile phone usage in Morocco continues to increase on the back of rising competition and declining prices over the past 18 months. The mobile penetration rate has climbed so rapidly in recent years that it has already exceeded the target set under the government’s “Digital Morocco 2013” strategy to reach 34m subscriptions in both fixed-line and mobile segments by next year.
However, this target was exceeded by mid-2011 thanks to the rise in mobile phone subscriptions, which currently amount to 38.3m for a population of just over 32m. Indeed, Morocco’s mobile penetration rate currently stands at around 120%, up from 113.6% at the end of 2011.
In terms of subscriber numbers, Maroc Telecom has the largest share, controlling 47.07% of the market, followed by Méditel with 29.93% and Wana with 23%. Since December 2011, Maroc Telecom has increased its customer base by 896,000, while Wana increased their own subscription numbers by 1.14m. Méditel, on the other hand, has lost some 574,000 customers since last year.
“The competition on the telecoms market has become more intense since Wana was awarded its GSM license in early 2010,” Fayçal Allouch, a telecoms analyst at CFG Group, told OBG. “Its policy was to compete on the basis of low prices through a series of aggressive promotions on prepaid services. Now promotions on the market are more important and more frequent. Recently, Maroc Telecom appeared to react positively to the competitive pressure as compared to Méditel whose market share decreased sharply over the last quarters.”
These results can be attributed in part to several legislative and administrative reforms that have not only spurred broader demand for telecommunications services, but also fostered a more competitive operating environment. Over the past two years, the National Telecommunications Regulatory Agency (Agence Nationale de Réglementation des Télécommunications, ANRT) has specified a host of new rules for both operators and customers, particularly for contract cancellations and extensions.
Amongst other rulings, the agency banned companies from applying punitive fees against customers withdrawing early from fixed-term contracts and charging them instead for outstanding fees. The ANRT has also mandated that companies seek the approval of customers to extend expired contracts. New regulations were also issued in April 2011 to allow mobile and fixed-line subscribers to switch networks while keeping their number. While free of charge for the customer, the new provider is to pay the previous provider a one-off fee of around Dh70 (€6.2).
Pre-paid services dominate the mobile phone segment and represent approximately 95.3% of subscriptions. “This number (95%) is quite typical for Maghreb countries,” Mohamed Elmandjra, the CEO of Méditel, told OBG. “The rate is high because people want to keep control over their expenses and because of debt and repayment issues. It’s also a question of habit.”
Following the launch of Wana in 2010, the three operators have competed fiercely, introducing a variety of offerings and promotions on voice calls, text messages, mobile internet and mobile phones. Maroc Telecom’s deal “Jawal Thaniya” allows customers to make calls for Dh0.03 (€0.003) per second, for example, and Wana’s Kibghit deal offers contracts starting as low as Dh88 (€7.9) a month for six hours of talking. Méditel offers a subscription for Dh79 (€7.1) per month that includes six hours of calls to a single number, plus four hours of talk time to fixed lines in eight countries.
As a result, the average revenue per minute of communication fell from Dh0.76 (€0.07) to Dh0.57 (€0.05) between September 2011 and September 2012, representing a year-on-year (y-o-y) drop of 25% and a significant decline from the rate of Dh1.63 (€0.15) in 2006.
Mitigating the decline in revenue, the duration of calls increased, with the average Moroccan mobile user spending 72 minutes per month on the phone in the third quarter of 2012, up from an average of 57 minutes in December 2011. Overall, outgoing calls amounted to 9bn minutes as of the third quarter of 2012, up from 6.3bn minutes the previous year, representing a 43.3% y-o-y increase.
However, even with longer calls, lower revenues in the mobile segment have hit the profit margins of telecom firms. Indeed, as of September 2012, Maroc Telecom’s turnover of approximately Dh22.5bn (€2.02bn) was down 3% compared to the same period in 2011. The value of in-country sales fell 7.1%, or Dh17.6bn (€1.58bn), driven by the 7.2% decline in the mobile segment and 11.5% in the fixed-line segment. Méditel posted the same turnover in the first half of 2012 as the previous year, hovering around Dh2.8bn (€251m). First-half 2012 results for Wana were not available as of early December.
Declining prices have resulted in a more competitive environment between the country’s main operators, who are eager to secure their market share, as well as boost subscriptions and sector activity. Mobile phone usage should continue its expansion as services become more affordable. The rolling out of the 4G mobile phone network expected at the end of 2013 should also result in more competition. However, the extent to which operators will adjust prices and secure profits will be the next question.