The Moroccan telecoms market is now quite mature, with growth in the mobile sector being driven by a move to post-paid premium services, but seasonal spurts mask underlying dynamics. Data usage is growing rapidly, but average revenue per user is seeing flat growth as a result of price competition. Local loop unbundling is still absent and this is holding back the development of the wireline market. Fibre is yet to become a commercially viable proposition, so broadband development is contingent on the continued rollout of 4G services.
Market Overview
The Moroccan mobile market plays host to three mobile network operators (MNOs), all of whom have built and operate their own infrastructures, including towers. All three offer 2G, 3G and 4G voice and data services, with the focus currently on 4G which was only introduced in 2015. Network sharing is yet to occur in Morocco, meaning that the capex burden for all three players is very high.
The largest player is the incumbent, Maroc Telecom, which also owns the country’s largest wireline voice and broadband services networks. It is 53%-owned by UAE-based Etisalat and, in turn, holds a number of Etisalat’s African mobile and wireline businesses. The Moroccan mobile business is, by far, its largest operation in terms of customer numbers and revenues. With 19.5mn subscribers as of June 2019, it accounts for an estimated 43.1% of the local mobile market.
In second place is Meditel, 49%-owned by Orange SA of France. A consortium of state owned banks and financial institutions is the majority owner, but it is Orange that has managerial control of the operator and it is through Orange that Meditel can avail a broad range of value-added services, ranging from social media and entertainment-orientated offerings through to more practical products such as lifestyle services. Meditel accounted for 34.8% of the market in June 2019, with 12.68mn customers.
The smallest player is Wana Telecom, which operates under the Inwi brand name. Its principal shareholder is another state investment company, Societe Nationale d’Investissement (69%), and it is the least transparent of the three operators, offering up no financial or operational metrics for analysis. It is estimated to have accounted for 22.1% of the market as of June 2019.
Figure 1: Mobile Market Share, June 2019
Mobile Subscriber Growth
The mobile market has reached a point where organic subscriber growth is now very difficult to come by; with few new customers coming into the market, operators have been engaging in price competition to take customers from one another, while new services and applications are leveraged as far as possible to retain customers and encourage greater spending. One major barrier to more dynamic growth could be the inefficient mobile number portability (MNP) platform, which serves more as a disincentive to switch networks. A new MNP system is being sought after as part of the government’s new 2019-2022 telecoms sector development plan.
As just 10% of customers were on postpaid plans as of June 2019, operators are clearly finding it challenging to improve their value proposition. Nevertheless, Inwi made a minor breakthrough in the value-added services field when, in early September 2019, it launched a limited mobile money service, the first of its kind in Morocco. Orange – which has had considerable success with its proprietary Orange Money offering elsewhere in Africa – has been unusually reticent about extending accessibility to its Moroccan unit beyond a basic money transfer facility it launched in 2013, although that may be down to its part-ownership by banks that would be threatened by such a service.
Figure 2. 10 year Mobile Subscriber Forecast
ARPU
Neither Meditel nor Inwi disclose financial data, including metrics such as average revenues per user (ARPU) or voice/data usage, but Maroc Telecom’s ARPU numbers show that monthly spending on mobile services has dropped appreciably in the last four years and now stands at MAD57.5 (June 2019). Its ARPU has hovered around this mark over the last 24 months, suggesting that price competition has stabilised, although in the incumbent’s case the decline may be being held in check by its ability to bundle its mobile offering with its wireline voice and broadband services.
With its superior subscriber mix (11.2% of its total mobile user base), we believe Maroc Telecom’s mobile ARPU is a little above the national average and therefore broadly indicative of the relative health of the other players.
4G & 5G Migration
Data from the national telecommunications regulatory authority (ANRT) suggest that migration to 4G-based networks is proceeding steadily but slowly, presenting further challenges to upselling new services and improving return on investment. Although 3G usage is on the decline, 2G connectivity remains in demand as rural users cannot reliably connect to or afford more expensive connections, while the older technology remains useful for utilities’ basic Internet of Things applications such as smart meters.
Maroc Telecom is the leading 3G/4G provider, accounting for just over 50% of the market as of June 2019. The remainder is split almost equally between the two smaller players. Around 75% of Moroccan mobile subscribers use smartphones; clearly, many of these do not fully avail the operators’ mobile broadband platforms.
5G concessions are not yet planned, although the government’s telecoms sector development plan for 2019-2022 takes into account the future licensing of 5G and Maroc Telecom has been trialling the technology in partnership with Ericsson. Even though the regulator has not announced the auction of 5G spectrum, we expect this to happen in the next four-to-five years.
Outlook
In the short term, volatility for operators is likely to continue as they look to migrate consumers to 4G through price-led promotions, but profitability will need to improve in the long term if they are to transition to 5G. It is forecasted that by 2028, the Moroccan mobile market will support 51.3mn subscriptions.
The demand for mobile data services has been fuelled by strong price competition between the operators, as well as the growing affordability of smartphones which means data access is now done through smartphones as opposed to through dedicated mobile broadband devices, such as dongles. 4G mobile subscriptions will reach 50.1mn subscribers, or 97.8% of the mobile market.
Morocco highlights
- Organic mobile subscriber growth is proving elusive, owing to market saturation. The underlying trend is one of 4G migration, with a commensurate but modest improvement in post-paid usage, which now stands at 10% of the overall user base.
- Mobile subscribers numbered 44.7mn in June 2019, a y-o-y increase of 2.4%, but flat growth on a quarterly basis. The penetration rate reached 122.1%, a sure sign that the market is mature.
