Morocco: Major African Mobile Markets: Future Growth Prospects

Morocco is a developing economy and faces problems typical to every developing nation. Some of these include issues regarding privatisation, government spending and economic growth. Morocco has rich natural mineral resources and is the world's largest exporter of phosphates. The country's manufacturing and tourism sectors have also gained prominence in local economics in the recent past, and industrial development and infrastructure improvements have been key in enhancing its standing in the region.

In 2004, the government took some favourable steps to boost trade and foreign direct investment in the country, such as signing a free trade treaty with the US, partially privatising some of the largest banks and telecom companies, etc. Such steps are constantly adding to the country's economic growth and making it an attractive destination for foreign investment activity.

Despite Morocco's economic progress, the country suffers from high unemployment, poverty, and illiteracy, particularly in rural areas. Key economic challenges for Morocco include reforming the education system and the judiciary.
Table 1 provides an overview of the country's key economic parameters.

Table 1: Morocco - Important Economic Parameters (2017)

Economic Parameter Value
Population (July '17) 33,986,655
Population Growth (AAGR) 0.97%
Unemployment Rate 9.3%
GDP (PPP) $300.1 bn
GDP real growth rate 4.8%
FDI inflows (2009) $2.318 bn
Source: CIA Facbook

The telecom sector has further scope for growth primarily because of the government's focus on increasing network coverage, encouraging e-commerce and bringing in new technologies.

Telecom Industry Overview

Morocco's telecom market is one of the most developed markets in Africa. It has one of the highest overall telecom penetration rates compared to other countries in the region. The sector has undergone various structural reforms in the past, such as the establishment of a separate regulatory authority (National Telecommunications Regulatory Agency (ANRT)) for the sector in 1998.

At the end of 2004, fixed-line services were provided by only one operator - Maroc Telecom, which is 34.1 percent government owned. Later, a second fixed-line licence was issued to Meditel in December 2005. A third license is expected to be granted soon.

Significantly, the country's mobile market is more developed than its fixed-line market, with wireline penetration at end-September 2005 less than 5 percent, while mobile penetration had already exceeded 33 percent at end-June 2005.

The telecom sector offers plenty of scope for growth, primarily because of the government's focus on increasing network coverage, encouraging e-commerce and adopting new technologies.

Table 2 provides an overview of the country's telecom sector in terms of segment-wise subscriber numbers and penetration rates.

Table 2: Morocco - Telecom Industry Snapshot September 2017

Segment Subscriber (Million) Penetration
Fixed lines (September 2017) 2.399 7.06%
Internet (September 2017) 22.564 66%
Mobile (September 2017) 44.250 130.2%

Figure 1 illustrates the forecasts for mobile subscriber growth and penetration rate in Morocco for the 7-year period from 2010 to 2017.

Figure 1: Morocco - Mobile Subscribers and Penetration 2010-2017E

Morocco - Mobile Subscribers and Penetration 2010-2017E

Source: Blycroft Publishing

Major Mobile Operators 

The Agence Nationale de Ruglementation des Telecommunications (ANRT) in its quarterly report recorded the number of mobile users in Morocco rising by 0.64 percent in the second quarter and was up by 1.48 percent year-on-year to 42.05 million at the end of June. Post-paid continued its growth, up nearly 11 percent from a year ago to almost 3.2 million subscribers, due to new low-cost packages launched by all three mobile operators.
Orange saw the greatest growth during the quarter, with 212,000 new subscribers for a total 14.30 million. Market leader Maroc Telecom gained 38,000 new customers in the quarter for a total 18.38 million at the end of June, and Inwi finished the period with 9.37 million mobile customers, up by 17,000 from March.

Figure 2: Morocco - Market Share of Mobile Network Operators 2Q 2017

Morocco- Market Share of Mobile Network Operators 2Q 2017

Source: ANRT

Maroc Telecom (IAM)

Maroc, a partially held government operator, was the first to provide mobile services in the country.

Maroc Telecom provides GSM-based mobile services and launched 2.5G (GPRS) services for its post-paid customers in 2004, along with MMS and the usual array of other non-voice value added services, such as SMS, logo downloads, picture messaging, etc. The network of Maroc Telecom covers about 97 percent of the Moroccan population. It won a 3G licence in September 2005 at a cost of USD 36.7 million.

Apart from the government, Etisalat, the United Arab Emirates telecoms group, holds the majority stake in Maroc Telecom. It achieved financial closure on 14 May 2014, when it acquired the majority stake from the French group Viviendi. Viviendi increased its stake from 35 to 51 percent in January 2005.

Figure 3, below, illustrates the shareholding structure of the company.

Figure 3: Maroc Telecom - Ownership Structure (April 2017)

Maroc Telecom - Ownership Structure (April 2017)

Source: Company Reports

Table 4 provides an overview of the operator's key performance indicators.

Table 4: Maroc Telecom - Key Performance Indicators (3Q 2017)

KPIs MAD USD
Consolidated Revenues MAD 26.02 Bn USD 2.68 Bn
EDITDA MAD 12.9 Bn USD 1.33 Bn
Consolidated Earnings MAD 8.1 Bn USD 833.2 Mn
Subscribers 56.0 Mn  

Source: Company Reports

Orange

On 8 December 2016 Orange announced the launch of the Orange brand in Morocco, where it replaced the Méditel brand. With 14.2 million customers at the end of September 2016, Orange’s Moroccan subsidiary brought together the second largest number of customers within the Group’s Middle East and African footprint, after Orange Egypt. It contributed close to 10% of revenues in this region.  

Formed in 1999, Meditel made telecoms services widely available in Morocco over both fixed and mobile networks. Meditel continuously invested in its network, which included more than 5,400 kilometres of optical fibre and more than 4,000 radio sites throughout the Kingdom. Meditel’s 2G and 3G networks provided coverage for 99% of the population. In March 2015, the Moroccan regulator assigned one of the three 4G licenses to the operator in recognition of the company’s highly-skilled staff and its technical know-how. Meditel was the first operator to launch a 4G service, in June 2015, and now provides coverage for 42% of the population.

The Orange Group has backed Méditel since December 2010, when it acquired 40% of the company. Orange has held 49% of Méditel’s capital since July 2015 and consolidates its financial results in the Group’s financial statements.

Figure 4 shows the ownership structure of the company.

Figure 4: Orange - Ownership  Structure

Orange - Ownership Structure

Source: Orange

Table 5 provides an overview of the operator's key performance indicators, where available.

Table 5: Orange - Key Performance Indicators (FY - December 2016)

KPI Value
Mobile subscribers (Mn) 13.62
Market share  32.8%
Pre-paid subscribers (Mn) 0.79
Pre-paid share 26.4%
Post-paid subscribers (Mn) 12.83
Post-paid share 33.3%
Revenue (USD Mn) 623.9
Goodwill (USD Mn) 316.3
Technologies 3G, 4G

Source: anrt, Orange

Inwi

Wana, Morocco's third telco launched a new GSM cellular network dubbed 'Inwi' on 23 February 2010 with an initial capacity of two million subscriber connections.  Wana planned to cut MT's and Meditel's 2G mobile prices by offering GSM packages to capture the market. The operator planned to offer a range of 3G W-CDMA-based services, such as video calling, videoconferencing, streaming media and mobile Internet. Wana had a much larger presence in the fixed-line market with its 'limited mobility' wireless offering, ANRT recording some 2.1 million subscribers at the end of 3Q 2009.

Inwi in January 2011 deployed SDR (Software Defined Radio) from a pilot site in Dakhla. SDR will help to optimise technical performance, and so better serve its growing subscriber base, which stood at 3.5 million at this time.

Inwi was reported in November 2012 to be interested in acquiring Tunisie Telecom's Mattel unit, this was later called off in January 2014.

Just 3 years from launch Inwi celebrates its 12 millionth customer in February 2013. It claimed that by offering charges 50 percent less than its competitors, it saw usage double, with mobile penetration growing from 81 percent in 2009 to 120 percent in 2012.

Inwi tested public wi-fi from 4 July 2013 in El Jadida, prior to its widespread deployment nationally. The National Regulatory Agency for Telecommunications (ARNT) licensed the technology in May 2012.

The aim was to release capacity on the 3G mobile network, so releasing bandwidth, pending the launch of 4G slated which must occur by 2014.

Inwi branded the offering 'WiFi 7dak' with users roaming between 3G and the wi-fi broadband network, and wi-fi terminals were to be installed in cities.  Inwi also leased fixed lines from Morocco Telecom to extend the coverage of its wi-fi network, by the end of 2013, Inwi it planned to launch an ADSL offering.

In arch 2014 Zain considered increasing its stake in Moroccan operator Wana, which operates the Inwi network.  Zain Group had at this time a 15.5 percent stake in the operator through a 50/50 joint venture with Morocco's Al Ajial Investment Fund Holding.

Inwi on 24 March 2014 launched HD (High Definition) Voice technology, significantly improving the sound reproduction on Smartphones.

 Table 6: Orange - Key Performance Indicators (FY - December 2016)

KPI Value
Investment to date USD 1.3 bn
Empoyees (2018) 1,104
Mobile subscribers (Mn) 9.56
Market share  23.0%
Pre-paid subscribers (Mn) 0.70
Pre-paid share 23.5%
Post-paid subscribers (Mn) 6.40
Post-paid share 16.6%

Source: inwi

The failure to conclude a deal for the sharing of Maroc Telecom's (MT) local loop has not stopped Inwi (Wana) from launching its ADSL service, local newspaper La Vie Eco has reported.

In October 2014 Inwi offered a free 12 month subscription to selected clients without an obligation to subscribe at the end of the trial period. Inwi informed the clients that it would manage the migration if they are existing MT clients, whilst keeping their existing fixed line number.

December 2014: The Agence Nationale de Reglementation des Telecommunications (ANRT) issued a decision setting out eight articles for infrastructure sharing the infrastructure of Morocco Telecom (IAM).  Competitors Meditel and Inwi had said they would not participate in a future 4G LTE auction unless they were able to share MT's fixed infrastructure, and the move by the regulator was introduced to allow their participation in the 2015 4G tender.

The ANRT's report on voice and internet QoS in February 2015 found that Inwi offered the best sound quality and a weighed overall rating of 77.5 percent, ahead of Maroc Telecom with 76.9 percent and Meditel with 74.7 percent.

Mobile operator Inwi (Wana) launched free' 4G Long Term Evolution (LTE) services on Wednesday 17 June 2015, with the network advertised as being accessible 'nationwide' and being available in 26 cities.

In May 2017 Inwi made pans to integrate satellite services from the Intelsat EpicNG platform into its network, it was expanding into cellular backhaul services following the awarding of a VSAT license by the National Agency of Telecommunications Regulation (ANRT), and also preparing to launch broadband connectivity services. 

Inwi renewed its call for effective Locla Loop Unbundling (LLU) regulation in January 2018. Technical director Rachid Mechahouri said that this was vital if it was to offer ADSL and VDSL services, adding that copper access remained an important part of its network strategy, along with fibre, LTE and satellite. 

Inwi noted that some 3 million homes are capable of being reached by ADSL, but only a third are taking the service. In December 2016 Inwi complained directly to Maroc Telecom over the failure to allow access for competitors. 

Inwi’s fibre infrastructure covered over 12,000 households, after the operator increased its reach to 10,000 km. Launched in 2016, its Marwan university network is now delivering broadband speeds between 100 Mbps and 5 Gbps to 80 academic establishments. Inwi expects to increase its infrastructure investment in 2018.

 

Recent Developments

Some of the recent developments in Morocco's mobile market are as follows:

In April 2017 the Moroccan Capital Market Authority (AMMC) allowed Maroc Telecom (MT) to buy back a maximum of MAD 286.5 million (USD 28.3 million) worth of shares.

Maroc Telecom (IAM) published its financial results for the three months ended 31 March 2017. It reported a 2.7 percent fall in revenues, from MAD 8.75 billion (USD 850 million) to MAD 8.52 billion (USD 841 million), mainly due to ‘the unfavourable calendar effect and important reductions in call termination rates in Morocco and internationally’. 

May 2017: The Agence Nationale de Ruglementation des Telecommunications (ANRT) in its quarterly report has recorded some 18.3 million Internet subscribers, representing an increase of 26 percent compared to 2016. 

The report found that there were some 16.97 million mobile Internet subscribers which represents a quarterly net increase of 1.15 million subscribers and an annual growth of 27.5 percent. The number of 4G mobile subscribers has now reached 3.4 million, a 21 percent growth since 31 December 2016. 

The number of mobile users in Morocco rose by 0.64 percent in the second quarter 2017 and was up by 1.48 percent year-on-year to 42.05 million at the end of June 2017, according to the latest data published by regulator ANRT.

Post-paid continued its growth, up nearly 11 percent from a year ago to almost 3.2 million subscribers, due to new low-cost packages launched by all three mobile operators. Orange saw the greatest growth during the quarter, with 212,000 new subscribers for a total 14.30 million.

Maroc Telecom Group's (IAM) revenues for the first nine months of 2017 fell some 2.5 percent to MAD 26.02 billion (USD 2.68 billion) from MAD 26.7 billion (USD 2.7 billion). This was attributed to a decline in revenues following the liberalization of IP telephony in November 2016 in Morocco and the decrease in mobile termination rates in Morocco and African subsidiaries, the company said.

Mergers and Acquisitions

Inwi is to integrate satellite services from the Intelsat EpicNG platform into its network it was reported in May 2017. Inwi is expanding into cellular backhaul services and, following the awarding of a VSAT license by the National Agency of Telecommunications Regulation (ANRT), is also preparing to launch broadband connectivity services. 

Regulatory Developments

Future Outlook

 Launch of new technologies

Maroc Telecom (IAM) launched fibre-to-the-home (FTTH) across major Moroccan cities in June 2017. The technology is now available in Rabat, Casablanca, Mohammedia, Marrakech, Tangier, Fez, Meknes, Temara, Kenitra, Oujda, and Agadir. The move follows the conclusion of successful trials in Casablanca and Rabat.