Taking the intelligent option.

Author:Ford, Neil
Position:Special Report/MENA TELECOMS - Mobile telecoms in the Middle East and North Africa region

The first mobile telecoms revolution seems to be over. Most people in the Middle East and North Africa (MENA) now have their own mobile handset and the scope for higher penetration rates is becoming ever more limited. Operators therefore have to focus on boosting their average revenue per user (ARPU) rates and data provision is the most obvious way to achieve this. Mobile internet access is the centrepiece of the second mobile revolution but this poses challenges in countries where governments have traditionally restricted access to some forms of information.

Most Gulf markets are becoming steadily more competitive, so profits are being squeezed and operators are looking to invest elsewhere in the world. Both Sub-Saharan Africa and North Africa offers scope for growth in terms of market penetration but also service penetration, as many people continue to make use of the 'pay as you go' model. The lack of access to landlines and broadband connections makes mobile internet access a tempting prospect for those able to afford it; while falling mobile internet access costs should rapidly expand the size of this potential market.

In November, Vivendi finally announced that it had agreed to sell its 53% stake in Itissalat Al Maghrib (Maroc Telecom) to Etisalat for 4.2bn [euro] ($5.7bn), slightly less that its market value at the end of April 2013, when offers were originally submitted by interested parties. Other potential suitors had included Qatar's Ooredoo and South Africa's MTN but the latter did not follow up its interest and Ooredoo lost out in the bidding. Etisalat, which is 60% owned by the government of Abu Dhabi, is already well established in Egypt and will now have a strong presence in the two biggest economies in North Africa, in addition to its operations in 13 other national markets.

The North African landscape

The government of Morocco holds a 30% stake in the company and has a veto over the sale of other equity in the business. Rabat had made it clear that it would only sanction a deal that attracted additional investment in telecoms infrastructure within Morocco. In addition, a further 17% is publicly traded on the Casablanca and Paris stock exchanges, so Etisalat will be required to make an offer to these minor shareholders if and when it secures a majority stake. French firm Vivendi decided to sell its stake as part of an intensive restructuring programme designed to reduce its 13.4bn [euro] ($18.3bn) debts and now intends to concentrate on its media interests. The divesture does not appear to have anything to do with the...

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