Mobile data services will help telecom revenue in the Middle East and North Africa (MENA) to grow by 27 percent over the next five years.
That's according to new research from Analysys Mason, which says revenue in that region will reach $96.4 billion (U.S.) by 2017, up from $70.3 billion in 2011. That's a projected compound annual growth rate (CAGR) of 5 percent.
The report, "The Middle East and North Africa telecoms market: trends and forecasts 2012–2017," says mobile-data services will be the fastest growth segment, with handset data revenue set to grow at a CAGR of nearly 18 percent between 2012 and 2017. Growth rates in subscriber numbers, however, will continue to decline, as will mobile voice prices, Analysys Mason says.
The report says penetration rates of active SIMs in Morocco, Saudi Arabia and the United Arab Emirates (UAE) have already exceed 100 percent of the population, and will surpass 100 percent in Algeria in 2012 and Egypt in 2014. Analysys Mason claims 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," noted Roz Roseboro, principal analyst for The Middle East and Africa research program. “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 goes on to predict 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 percent of all SIMs in the region) by 2017. Even though 4G connections will grow at a CAGR of 122 percent between 2012 and 2017, 4G will only account for 10 percent 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 (USD37 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 USD5.5 in 2011).
“ARPU has declined from USD15.3 per month in 2009 to USD12.5 in 2011," explained Roseboro. “This decline will level off towards 2017, when it will be USD11.0 in 2016 and USD10.9 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 percent 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 percent of voice connections were mobile, increasing to 86 percent by 2011. This will grow further to 91 percent by 2017, Analysys Mason forecasts.