Friday, March 15, 2013

Future of Mobile Landscape in the GCC

Gulf Cooperative Council or GCC with its high mobile and internet penetration, is on the verge of experiencing a mass scale digital revolution. A part of it could be explained from the fact that these countries enjoy high per capita income coupled with a population skewed heavily towards the younger demographics. This interesting proposition of GCC has propelled us at Mixilion to think, how the landscape of mobile in the region look in the near future? After some brainstorming our team of analysts has figured out few of the following dimensions which may play a crucial role in defining the future of mobile landscape in the GCC.

·         Mobile Internet- Mobile internet will play a crucial role in the GCC. The growth in mobile internet consumption will be driven by rapid rise in smart phones, tablets and other hand held device penetration. In UAE alone the overall smart phone penetration stands high at 47 percent and is further expected to reach 80 percent by 2016. Similar high penetration exists in other GCC countries as well. For instance in Qatar and Saudi Arabia the overall smart phone penetration is estimated to be around 75 percent and 54 percent respectively. (This should further expand, pertaining to higher income and younger demographics). Internet consumption on mobile devices is surely going to zoom in the coming time. Coming to the nature of consumption, social media, communication, application download and advertisements could have prominent roles to play.  

·         Mobile Applications- A higher mobile internet consumption will eventually give rise to higher mobile applications usage. According to a research conducted by Real Opinion, a Dubai based research agency, on an average 6 mobile applications are downloaded every month by a present smart phone user in the Middle East region. (The figure should ideally be higher for GCC). This is will grow further, driven by rising penchant for smart phones. Coming to the categories of applications, besides communication application other popular applications will emanate from the domain of social networking, travel, business, banking, finance and maps and navigation etc. Not to mention religion, music and video. In the paid category, convenience, banking, finance and communication applications could be the leaders.

·         Arabic Content – In spite of the fact that Arabic is spoken throughout the GCC as well as Middle East region, there is dearth of good quality digital content in the language. This compels individuals to opt for contents in English, French and other non Arabic languages. However as the mobile landscape is evolving very fast in the region with penetration skyrocketing in the recent time; mobile companies have started taking development of good quality Arabic contents high up on their agenda. More and more telecom companies and mobile media and technology companies are working towards developing good quality Arabic contents. In the near future Arabic should constitute a substantial part of the overall mobile contents in the GCC.

·         Security: Increase in mobile penetration will call on telecom operators as well as media agencies to ensure better security measures. Both individuals as well as enterprises need to be insulated from the ever increasing threat of mobile viruses. A mobile virus may result in unauthorized SMS, calls and loss of data creating serious trouble for organizations and individuals. Hence security is one dimension which will seek a lot of attention from everyone in the mobile ecosystem- operators, regulators, technology firms and consultancies.                

          The article was originally published in Mixilion, MENA’s 1st crowdsourcing platform.

Wednesday, March 6, 2013

Egypt- Mobile Market Analysis

Egypt is the biggest Arab country. One of the oldest civilizations in the world, it plays a significant role in Middle Eastern trade commerce and geopolitics. The given research article have been written with the intent of analyzing the telecom sector in the biggest Arab country.

In spite of the Arab crisis which resulted in suspension of telecom services for many days, the sector appears to be very buoyant.  The combined growth of the three networks has been 23.1 percent since 2008. The gross profit has been around US $ 6.35 billion by the end of 2011.

As with any other emerging economy the fixed line market is declining fast and is getting replaced by mobile telephone. With around 83 million mobile subscribers, Egypt enjoys a near about 100 percent mobile penetration. The buoyancy in the market is expected to continue further in the near future which will be driven by data services, next generation services like Long Term Evolution (LTE) and newer technology solutions such as NFC etc. According to a research conducted by Frost and Sullivan the overall penetration will get two fold by 2018.

Key Facts about the Egyptian Telecom Market are as follows-
·         The total number of mobile subscriber in Egypt is around 83 million. The total number of fixed line subscribers is around 8.57 million.

·         The mobile market in Middle East is associated with three players- Vodafone (40.4 percent), Mobinil (35.8 percent) and Etisalat (23.8 percent). In the fixed line space there is just one incumbent player involved named Telecom Egypt.  

·         The total number of USB modem users was around 2.83 million by the end of March 2011. Between 2011 and 2016 the overall broadband user base which includes USB modem, smart phones and other portable device users are expected to grow by 12.4 percent every year. By 2016 the total numbers of broad band users are estimated to be around 8.276 million.

·         According to Arab Advisor survey which was conducted in September 2012, smartphones constitute 8.4 percent of the total mobile handset. The survey also revealed more than half of the smart phone users use applications out of which around two third prefer apps in English language.

Strength- Mentioned below is some of the fundamental strengths of Egyptian telecom sector.  

·         Emerging economy with a substantial population- Egypt’s status as a emerging economy with a substantial population of over 80 million makes it a fertile ground for telecom companies to flourish.

·         Evolving Market- As discussed above Egypt enjoys a rapidly evolving telecom market, both across vertical as well as horizontal dimensions. The telecom sector is making strong strides in terms of growth and the momentum is expected to continue in the near future as well.

·         Young Demographic- In line with the general demographic trends in the Middle East, Egypt’s population is highly skewed towards the younger demographics. The median age of Egypt is 24. Younger demographics with strong penchant for latest technology can ensure growth in value added services.

Weakness – All is not great with the Egyptian telecom sector. It is associated with some fundamental weaknesses as well, which are mentioned below-
·         High prepaid market- Like other African countries Egypt is still a high prepaid market with voice services still dominating.

·         Low internet usage- Mobile internet has huge potential in Egypt proliferate in the coming time. However presently the market is still not very matured in terms of data usage.

·         Aggressive Pricing- Egyptian market is marked with very competitive pricing strategy played by the three players. This results in high churn out as subscribers jump over from one operator to another.  

Opportunities- Egypt’s telecom market can make use of the following opportunity in the near future
·         Triple License- In 2010 Egypt announced winning bidder for two triple play licenses. One was won by consortium including Mobinil and Orascom media and other was won by Teletech, a consortium led by Vodafone. According to a research conducted by Frost and Sullivan it is expected to raise revenue of USD $ one billion in the next five years.

·         Multiple Tower Sharing- Egypt’s National Telecom Regulatory Authority has allowed usage of multiple towers sharing, where a single tower will be shared by multiple operators. As tower building constitutes 50 percent of CAPEX for Egyptian operators, multiple tower sharing may result in reduction in operating cost and better profit margins. Not to mention better roll out of services as the money could be channelized to other technologies such as 4G (LTE).  

·         Expat population- A large no. of Egyptians is living in the Gulf countries. Many of them work as labor force and are often unbanked. In such cases mobile phone could be used to transfer money to their home country. Hence the expat work force of Egypt offers a great opportunity for mobile banking and mobile payment to flourish.  

Threat- One of the biggest threat to Egypt could be the political system which is still far away from being considered completely stable and intact.
·         Political Unrest- Beneath a government system led by Mohamed Mursi there are signs of unrest in Egypt. This could be testified by the recent street violence which took 52 lives. The possibility of a political unrest in the near future could be disastrous for the evolving telecom sector.