THERE were 231.21 million mobile subscriptions in Africa by the end of June 2007. This represents an increase of 45.02 per cent year-on-year, a rate that has made the continent the world's single fastest-growing regional mobile market.
Africa's five biggest mobile markets - South Africa, Nigeria, Algeria, Egypt and Morocco - accounted for 59 per cent of the continent's subscription base by the end of June. As we enter 2008, Nigeria is expected to have overtaken South Africa to become the continent's largest mobile market.
The number of mobile subscriptions in the Middle East grew by 30.25 per cent year-on-year to reach 146.77 million by the end of June 2007. Turkey was the largest market in the Middle East with 56.58 million subscriptions and Saudi Arabia the second largest with 23.89 million, up by 40.39 per cent year on year. Iran had 17.04 million subscriptions by the end of June, following growth of 76.61 per cent year on year.
The rate of mobile penetration in Africa by the end of June 2007 was about 25 per cent, compared with 49 per cent in the Middle East, which may indicate that Africa offers the greater growth potential.
The high rates of mobile market growth in the Middle East and Africa - and the prospect of further growth to come - have been propelled by and have unleashed, a wave of liberalisation and takeovers in recent years.
For example, South Africa's MTN bought Dubai-based Investcom for US$5.5 billion in 2006, becoming the largest operating group in the Middle East and Africa with 40.75 million proportionate subscriptions by the end of June, through its operations in 21 countries in the region. MTN also launched Iran's number two network Irancell in the third quarter of 2006.
In August 2006 three operators - Korek of Iraq and Kuwait companies Wataniya and Zain (formerly MTC) - each agreed to pay US$1.25 billion for long-term licences in Iraq. More recently, Etisalat of the UAE launched Egypt's third mobile network in May 2007, having paid US$2.9 billion for the licence.
Etisalat enjoyed rapid growth in Egypt, reporting one million subscriptions by the end of June.
And in a landmark contest in the first quarter of 2007, Zain submitted a record winning bid of US$6.1 billion for Saudi Arabia's third mobile licence, the most expensive in the world on a per capita basis, costing US$226 per Saudi inhabitant However, the Saudi contest may represent a high watermark, as the last major new licence target in the region for the foreseeable future.
Nevertheless, there are still investment opportunities. The forthcoming privatisation of Algerie Telecom and its mobile unit Mobilis is expected to be hotly contested by major investors from within and outside the region. The planned privatisation of Lebanon's two mobile operators it also expected to attract a lot of interest, as was the case with the contests for Qatar's second mobile license and Kuwait's third mobile operator.
Zain completed its takeover of pan-African operating group Celtel in 2007 and set out new targets, including that of more than doubling its subscription base to 70 million by 2011, with most of that growth to come in Africa. Celtel said it would spend US$1.5 billion in 2007 on its network in the key Nigerian market, where it aims to become the largest operator.
Also in Nigeria, Etisalat has formed a joint venture with Abu Dhabi investment group Mubadala to launch the country's fifth GSM network in 2008. Etisalat has also raised its shareholding in West Africa's Atlantique Telecom, which operates networks in half a dozen countries in West and Central Africa, from 50 per cent to 70 per cent.
On the other side of the continent, Etisalat has raised its shareholding in Tanzania's number four operator Zantel from 34 per cent to 51 per cent, apparently with a view to using it as a springboard into the wider East Africa region.
In Uganda, where the mobile penetration rate was just 11 per cent by the end of June, two Middle Eastern operators - Saudi Arabia's Hits Telecom and Warid of the UAE - are to launch new GSM services, even though there are three existing networks.
While opportunities in the Middle East and Africa may be more scarce and expensive than previously, for western operators the continued high rates of growth represent an attractive alternative to their stagnant home markets.
Vodafone is the second largest operating group in the Middle East and Africa after MTN - and could become the largest if talks to buy out the stake that South Africa's Telkom holds in its Vodacom joint venture are successful.
Vodafone is not alone, however. France Telecom, Portugal Telecom and French media conglomerate Vivendi have all stepped up their activities in the region, and the contests for Saudi Arabia's third mobile licence and Qatar's second license attracted bids from European, Indian and US operators, along with players from within the region.
As well as opportunities for telecommunications investors, there are opportunities for new telecoms technologies in the Middle East and Africa. In Saudi Arabia, STC and Mobily had accumulated two million 3G subscriptions little more than a year after launching 3G networks.
In less developed markets, poor provision of fixed-line broadband services means that there may be a particular opportunity to offer wireless broadband services as an alternative. Vodacom launched a 3G/HSDPA network in Tanzania in the first quarter of 2007 with the aim of tapping into that potential market, as did Safaricom with the launch of its 3G/HSDPA network in Kenya in the fourth quarter.
Other operators are using WiMAX:
Zain and local operator Mena Telecom are both developing nationwide WiMAX networks in Bahrain, while Warid plans to launch WiMAX services in Uganda.
And finally in September, Jordan became the first country in the Middle East to establish a regulatory framework for MVNOs. As a result, it is expected also to be the first country in the region to host an MVNO.
Matthew Reed is editor of the Informa Telecoms & Media Research Service, Middle East and Africa Wireless Analyst