Telecoms Revenue in MENA Forecast to Grow to $96.4 Billion in the Next 5 Years

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Telecoms revenue in the Middle East and North Africa (MENA) is expected to grow by 27% between 2012 and 2017 at a compound annual growth rate (CAGR) of 5% according to new research from Analysys Mason.

According to their report, revenue will increase from USD70.3 billion in 2011 to USD96.4 billion in 2017. The fastest growth area during the forecast period will be mobile data services, with handset data revenue set to grow at a CAGR of 17.9% between 2012 and 2017.

However, growth rates in subscriber numbers will continue to decline, as will mobile voice prices.

The penetration rates of active SIMs in Morocco, Saudi Arabia and the UAE already exceed 100% of the population, and will surpass 100% in Algeria in 2012 and Egypt in 2014. The report argues that any new subscribers will have low incomes and usage, and are therefore very likely to chase deals. Operators in the region will be increasingly pressured to reduce their mobile voice tariffs in the face of over-the-top voice and messaging services.

"Given these declines, operators will look to increase the average revenue per user (ARPU) of their higher-value customer base by encouraging greater mobile data usage," explained Roz Roseboro, Principal Analyst for The Middle East and Africa research programme. "Because the growth in subscriber numbers is slowing, operators will also focus on retaining their customer base, although this will be difficult because the newer, lower-income subscribers tend to be less loyal than the established higher-end ones."

The report predicts that the number of 2G connections will peak in 2015, at which point 3G and 4G connections will start to take over. Specifically, 3G will be the dominant network technology, reaching 192 million SIMs (43% of all SIMs in the region) by 2017. Even though 4G connections will grow at a CAGR of 122% between 2012 and 2017, 4G will only account for 10% of SIMs by 2017, and will not launch in Egypt until 2013 and Morocco in 2014.

Average revenue per user (ARPU) within the region generally correlates to GDP per capita. UAE has the second-highest GDP per capita, and the highest ARPU (US$37 per month in 2011), which is nearly three times the regional average. The ARPU in the lowest-income country, Egypt, is lower than half the average (at US$5.5 in 2011).

"ARPU has declined from US$15.3 per month in 2009 to US$12.5 in 2011," explained Roseboro. "This decline will level off towards 2017, when it will be US$11.0 in 2016 and US$10.9 in 2017."

The number of broadband connections grew strongly between 2009 (15 million) and 2011 (28 million), and the report predicts that the number of connections will nearly double again by 2017. Of these, 69% will be mobile-based.

Mobile will continue to dominate the voice market in MENA because of limited fixed infrastructure, as well as the geography and demographics of the region. In 2009, 82% of voice connections were mobile, increasing to 86% by 2011. This will grow further to 91% by 2017.

Mobile's growing dominance is also evident in the split of voice traffic volumes. Fixed traffic declined at a CAGR of -4.3% from 2008 to 2011 and will continue to decline at a CAGR of -2.4% from 2012 to 2017. In contrast, the volume of mobile voice traffic grew at an average of 19% per year between 2008 and 2011, and will continue growing at a CAGR of 5.8% in the next 5 years. By 2017, 87% of traffic will be mobile-originated, compared to 79% in 2011.

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