Summary

The growth rates as well as the EBIDA margins enjoyed by network operators are indicative of the need to service the pent up demand in these markets. The third quarter 2009 results from Orascom tend to re-enforce this.

Analysis

The growth rates as well as the EBIDA margins enjoyed by network operators are indicative of the need to service the pent up demand in these markets. The third quarter 2009 results from Orascom tend to re-enforce this.
Interestingly Orascom operates in markets which are nearing saturation and are more sophisticated such as Tunisia and Egypt, implying that the operator is seeking to leverage the growing demand for data services.
The correct regulatory environment is a major enabler for the network operators in respect of data services, a clear example of this is the Egyptian market where the sector regulator has forced open the market via initiatives such as local loop unbundling etc. leading to a massive uptake in broadband services. There has been a clear knock effect for mobile operators and their 3G HSPA offerings in this market with an eye towards the roll out of LTE.
The North African markets appear to offer the operator a better market while the operation in Pakistan while experiencing a lower growth rate over the past quarter is expected to pick up as the operator attempts to meet the demand for basic voice and messaging services in that country.
In the sub-Saharan market Orascom has played the market softly with a presence in four countries, two, Zimbabwe and Central African Republic via shareholding in Telecel. Some years ago Orascom announced that it would begin divesting itself of its Sub-Saharan interests in an effort to concentrate on the Middle East and North African markets something the company regards as its “home turf.” However, the company recently sought to take a stake in the second mobile operator in Nambia, CellOne in a move which seems to fly in the face of the original strategy. Other markets are Burundi.
A likely strategy that Orascom is expected to develop in the short term will be:
  • Increased subscriber growth targeting the lower ARPU subscribers in existing markets
  • Exploring additional opportunities in the MEA Africa region via either acquisition or green field licenses and
  • maximising its current and potential data services services offering.

Analyses are solely the work of the authors and have not been edited or endorsed by GLG.