CAIRO: Egypt's mobile phone market is kicking off 2011 with a penetration rate of 80 percent, bringing it closer to saturation, analysts say. By the end of October 2010, there were 65.488 million subscriptions, representing an increase of more than 12.5 million, or 23.6 percent over 2009 figures, Reuters reported citing an official website. The report comes on the heels of an announcement made by Mobinil, Egypt's biggest mobile phone provider, that it reached the 30 million-subscriber milestone last week. Between the three mobile operators — Etisalat, Mobinil and Vodafone — there were 52.978 million subscribers by October 2009. Mohamed Hamdy, telecommunications analyst at CI Capital, noted that given the latest figures “the mobile market is approaching the saturation phase,” adding that “we expect Egypt's mobile market to continue growing in terms of subscriptions but at a lower rate.” The annual growth of subscriber growth, he says, will slow from a robust 20 percent in 2010 to a more modest 11 percent this year, and cooling off into the single digits after 2012, near to 6 percent. CI Capital projects that by 2013 the market will have officially reached saturation, forcing the three main providers to reorient their focus away from attracting new customers to begin undercutting one another through competitive offers. “This is likely to involve the expansion of lower on-net tariffs, though as time passes we will not be surprised to see mobile operators begin offering innovative perks,” Hamdy added. Hamdy underscored the importance of bearing in mind the new guidelines issued by the National Telecommunications Regulatory Authority (NTRA), which call for reducing migration fees from LE 75 to LE 25, adding that in spite of the new fees, low-cost calls, value-added services and network quality will continue to be the major market leaders “main retention tools.” Reuters reported that the head of Egypt's telecommunications regulator stated in July 2010 that a fourth mobile license would be offered this year, Hamdy provided a divergent view, saying: “The Egyptian government is not expected to offer a fourth mobile license nor a second fixed-line license before 2013 as it lost its economic merit.” The country's first mobile virtual network operator (MVNO) would be made available this year as well, Reuters reported, which Hamdy confirmed as being likely. Should the MVNO license go up for grabs, it is expected that Telecom Egypt (TE) would be the firm most likely to land it, and when a fourth mobile license becomes available, TE, too, is expected be the firm to lay claim to the new license. The outcome of a fourth mobile operator entering the scene would invariably have an impact on the competition. Hamdy indicated that the new market player would concentrate more on value-added services rather than engaging in a price war. Such services “should help mobile operators mitigate the continuous erosion of mobile average revenue per user (ARPU) and the associated decline in profitability,” he added. In related news, RNCOS, a market research and information analysis firm, found that the number of 3G subscribers in the Middle East reached around 4 million at the end of 2010, representing a 60 percent compound annual growth rate.
