TELECOMS

ALGERIA’S SECOND GSM OPERATOR ENDS 2002 WITH A DOMINANT MARKET SHARE

Orascom Telecom Algeria launched its service in February 2002 and managed to command 70% of the market after less than 10 months of operations. Algérie Télécom, the government owned incumbent, is undertaking major new projects to remain in the competitive game. The competition, along with further liberalization plans in the market, present exciting new opportunities for telecom equipment vendors.

The Algerian telecommunication law of August 2000 set the rules for enabling competition in the sector, and created a regulatory authority in charge of regulating the telecom sector. The start of duopoly competition in the GSM segment has managed to lift the country’s 2002 GSM penetration rate to close to 400% of its 2001 levels where the market added 330,000 new subscribers in 2002. This is more than 14 times the number of subscribers added in 2001 when the market was still a monopoly market.

The liberalization process is set for acceleration. Algeria’s government plans to introduce a license for a fixed services operator in rural areas and another license for an international and country long distance operator in 2004. Moreover, two VSAT licenses were awarded this month.

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"The fixed line network continues to have a low penetration rate, which reached 6.18% by end of 2002. The PSTN service, however, has been the highest revenue generating service for Algérie Télécom, and constituted 73.81% of the total telecommunication revenues in 2001. This trend is set to change as the GSM market continues its rapid growth." Arab Advisors Group’s analyst, Serene Zawaydeh, wrote in the report. "The Arab Advisors Group expects the mobile subscribers to increase rapidly as the effects of duopoly, and then full competition in 2004, "kick in". The Arab Advisors Group projects the number of mobile subscribers to exceed 10 million in 2007, almost double the number of the PSTN subscribers that year. Revenues from mobile operations are expected to reach US$ 2.376 billion in 2007, while the PSTN revenues are expected to grow to US$ 577.500 million in the same year." Ms. Zawaydeh added.

SITEL, a joint venture between Ericsson Sweden and Algerian companies, supplies the bulk of the fixed line network in Algeria. As for Algérie Télécom’s mobile network, it has also been installed by Ericsson, which was also awarded a contract in February 2003, to expand the mobile network by at least 500,000 lines. Clearly, Ericsson has a very strong position in the Algerian market.

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