Africa > North Africa > Algeria > Algeria Communication Profile

Algeria: Algeria Communication Profile

2012/06/12

Algeria’s telecommunications industry is set for something of a shake-up in 2012 with the much-anticipated launch of 3G mobile services in the second half of the year. The mobile telephony sector has grown rapidly since it was liberalised in 2000, and the long-awaited introduction of high-capacity data networks offer a new opportunity for operators to boost margins and move away from focusing solely on subscriber increase.

The mobile GSM market is currently dominated by three major operators: Mobilis (Algérie Télécoms), Djezzy (Orascom Télécoms Algérie, OTA), and Nedjma (Wataniya Télécoms Algérie). Mobile penetration rates skyrocketed from 1.5% of the people in 2002 to 94.4% in 2011, or 33.74m mobile subscriptions, thanks in large part to aggressive liberalisation.

Although Algeria still has some room for increase in terms of subscriber numbers – particularly in comparison to the mobile penetration rates of 100.1% in Morocco and 106% in Tunisia in 2011, according to the International Telecommunications Union (ITU), which come about from a large amount of churn and dual subscribers – operators have been increasingly looking to expand revenue-rich data services to limit the impact of thinning margins from voice segments and subscriber increase.

Mobile data services are already in high request, with limited GPRS and EDGE packages. However, given the expected increase in both consumer request for improved speeds and higher data consumption, the Ministry of Post and Data and Communications Technology (MPTIC) launched a tender for 3G licences in September 2011, with the goal of issuing licences by late October and officially starting 3G services by March 2012.

That deadline has since been postponed, as ministry officials first seek to resolve the ongoing negotiations over the possible sale of Djezzy. With additional than 14.5m subscribers at the end of 2010, Djezzy represents roughly half of the national market share and is owned by Russia’s Vimpelcom, which acquired Djezzy from Egypt-based Orascom Telecom in 2011. The Algerian national has made efforts to nationalise Djezzy since October 2010, which have led to drawn-out negotiations with Vimpelcom over the past 12 months.

Both parties have agreed to work on a liberal transaction that will allow the government to acquire a 51% stake and will leave Vimpelcom as the operator, although a separate court decision in March to impose $1.25bn in fines related to currency transactions may complicate things.

Nevertheless, ministry officials estimate that negotiations will wrap up in the coming months and that the launch of 3G services can be anticipated for mid-to-late 2012, local media reported.

Whenever the rollout of 3G services is concluded, the process will serve as simply another step in the impressive expansion of the country’s telecoms sector. From 2002 to 2008, total turnover in the mobile sector increased sevenfold, from €530.34m to €3.71bn. The proportion of GDP coming from mobile telephony declined slightly over the same period, from 6.3% in 2002 to 4.05% in 2008, but this is largely due to higher hydrocarbons revenue on the back of rising world oil prices.

The increased activity in the mobile data segment will likely help push prices down for internet access, which will be of enormous benefit for the consumer. Algeria ranks seventh part Arab states for the affordability of the data and communications technology (ICT) services across the board, including fixed-line telephone and internet services, and 71st globally. Data from the ITU show that Algeria’s in general ICT price basket, or the total spending on ICT as a percentage of average per-capita income, decreased from 3.5% of annual income in 2008 to 3% in 2010. From now on there is considerable request for internet part the people; in 2010, the in general internet penetration rate reached 12.5%, but only 2.5% of the people held broadband internet subscriptions.

While prices for fixed telephone services rose slightly to 1.5% in 2010, mobile prices decreased from 4.4% to 3.4% of average income per capita in 2010. Prices for 3G data services have not from now on been made public, but efforts by mobile operators to build and maintain their subscriber base are expected to keep prices down.

As mobile telephony services become additional affordable, Algeria can expect to see a further jump in telecoms sector activity in 2012. With a diminishing pool of potential new mobile subscribers, the introduction of 3G services by mid-year should profoundly change the market. However, the government will need to seek a speedy resolution to the discussions over the ownership of Djezzy for the sector to fully benefit from the opportunities that new services present.

3G mobile licences expected in 2012

Algeria has of the highest teledensities in Africa. Its relatively well developed infrastructure N9? BN/.?BNV?NBVincludes a national fibre backbone and of Africa’s first FttH deployments. The country’s oil and gas reserves have made it of the wealthiest nations in Africa. The market has been affected by the world economic crisis, and its recovery will in part depend on how the wave of social and political unrest currently sweeping the region will pan out. A shadow has as well been cast on investor confidence by recent moves of the government to take control of the country’s leading mobile operator.

At close to 100% penetration, subscriber increase in the mobile market has slowed considerably, and the attention is shifting to maintaining or improving the average revenue per user (ARPU) which has continued to decline under intensifying price competition between the three networks: Algerie Telecom’s Mobilis, Orascom’s Djezzy, and Wataniya’s Nedjma. The operators have entered the underdeveloped Internet market by launching basic mobile data services, but the licensing of third generation (3G) spectrum has been delayed, which has made it difficult for them to fully compete in the broadband sector. However, 3G licences are now expected to be issued in 2012.

In the meantime, fixed-line incumbent Algerie Telecom (AT), itself a mobile operator, has expanded its ADSL and WiMAX networks and upgraded its CDMA WLL system with broadband capabilities. ADSL prices are already part the lowest in Africa. Several of the country’s ISPs are rolling out their own WiMAX wireless broadband infrastructure. The full liberalisation of VoIP Internet telephony is enabling them to become players in the voice market as well. On the other hand, almost half of the country’s ISPs lost their licences in 2011 due to unpaid licence fees.

Competition in the fixed-line sector received a setback in 2008 when the second operator, Lacom (a joint venture between Egypt’s Orascom Telecom and Telecom Egypt) exited the market after three years of operations, citing regulatory barriers that made it impossible to compete (AT). Only months later, the already delayed privatisation of AT was called off. The number of fixed lines in service fell by 16% the following year but has since then recovered.

To provide fixed connections, AT has made extensive use of CDMA wireless technology which supports broadband and full mobility. In parallel with the access networks, the national and international fibre optic backbone is being upgraded to an IP-based next-generation network (NGN). The government has announced investments of €100 million into national fibre infrastructure over the years to 2014.

This statement contains an overview of Algeria’s telecommunications market, analysis and key statistics, profiles of the major players, and scenario forecasts for the mobile and Internet market to 2013 and 2016.

Market highlights:

  • of the highest levels of mobile and fixed-line penetration in Africa;
  • ARPU has stabilised following intense price competition;
  • 3G mobile licences expected in 2012;
  • Government is trying to take control of the country’s leading mobile operator;
  • Almost half of the country’s ISPs lost their licences in 2011;
  • Forecasts for mobile and Internet markets to 2013 and 2016;
  • Profiles of major players in amount market sectors;
  • Major investments in national fibre infrastructure.

Estimated market penetration rates in Algeria’s telecoms sector – end 2012

Market

Penetration rate

Mobile

99%

Fixed

8.6%

Internet

21%

(Source: BuddeComm based on various sources)

Fixed-Line Telecoms Overview

With a fixed-line penetration of around 8% and mobile penetration close to 100%, Algeria has of the highest teledensities in Africa. Its relatively well developed infrastructure includes a national fibre backbone and of Africa’s first FttH deployments. The country’s oil and gas reserves have made it of the wealthiest nations in Africa.

Competition in the fixed-line sector received a setback in 2008 when the second operator, Lacom (a joint venture between Egypt’s Orascom Telecom and Telecom Egypt) exited the market after three years of operations, citing regulatory barriers that made it impossible to compete with Algerie Telecom. Only months later, the already delayed privatisation of Algerie Telecom was called off and the licensing of third generation mobile spectrum delayed further. The number of fixed lines in service fell by 16% the following year but has since then recovered. 3G licences are now expected in 2012.

To provide fixed connections, Algerie Telecom has made extensive use of CDMA wireless technology which supports broadband and full mobility. In parallel with the access networks, the national and international fibre optic backbone is being upgraded to an IP-based next-generation network. The government has announced investments of €100 million into national fibre infrastructure over the years to 2014.

Mobile Market Overview

At close to 100% penetration, subscriber increase in Algeria’s mobile market has slowed considerably, and the attention is shifting to maintaining or improving the average revenue per user which has continued to decline under intensifying price competition between the three networks: Algerie Telecom’s Mobilis, Orascom’s Djezzy, and Wataniya’s Nedjma. The operators have entered the underdeveloped internet market by launching basic mobile data services, but the licensing of third-generation spectrum has been delayed, which has made it difficult for them to fully compete in the broadband sector. However, 3G licences are now expected to be issued in 2012.

The market has been affected by the world economic crisis, and its recovery will in part depend on how the wave of social and political unrest currently sweeping the region will pan out. A shadow has as well been cast on investor confidence by recent moves of the government to take control of the country’s leading mobile operator. However, should the mobile networks succeed in ending their price war and transforming themselves into converged service providers, absorbing much of the broadband internet market on top of the mobile voice market, the market still has enormous potential.


Telecoms Market
At around 85% penetration, the spectacular subscriber increase curve of Algeria's mobile market is beginning to flatten and attention is shifting to maintaining or improving the ARPU which has continued to decline under the intense competition between three networks. The network operators have entered the lucrative underdeveloped Internet sector by launching mobile data services and will be able to offer true broadband services under third-generation 3G licences to be issued shortly.

This upcoming competition is accelerating developments in the fixed and fixed-wireless access sector, where ADSL2+ and SHDSL are being rolled out inclunding EV-DO and WiMAX wireless broadband services and of Africa's first FttH networks. In parallel, the national and international fibre optic backbone is being upgraded to an IP-based NGN to support converged services and the growing traffic load. Forecasting to 2015 is included for the fixed-line, Internet and mobile markets.

Internet country code: 

.dz

Communications note: