February 4, 2011
Since the Tunisian regime was dethroned last month, Egypt has been on fire. Hundreds of thousands of Egyptian protesters are taking to the streets demanding political change. As in the case of Tunisia, information and communications technology (ICT) tools such as online social networks, blogs, email, SMS and voice services have been used to prepare and organize the protests in Egypt. This led the Egyptian government to ban Facebook and Twitter, followed by a ban on all Internet service for several days (Jan. 27 to Feb. 1).
Ironically, the Egyptian government utilized some of these same ICT tools for their own benefit. Through Vodafone Egypt, in which it has a 36% ownership stake, the government has been sending SMS messages to the Egyptian people. These messages, which have provoked an outcry from some operators, emphasized the benefits of maintaining the political status quo.
Exhibit 1: Sample posts organizing protests in Egypt
This wide and effective use of ICT has been made possible by the development and growth of a competitive market structure in the telecom sector. Egypt enjoys a relatively strong ICT infrastructure, and the sector is far more developed than others in the region. There are three mobile operators providing competitive services at competitive rates. All three provide nationwide coverage, including 3G, covering about 75% of the country’s population. The uptake of cellular services has been impressive, especially for a low-income, price-sensitive economy such as Egypt’s, with cellular penetration reaching 78% by end of 2010.
The country’s fixed-line network coverage is fair, with around 9.4m fixed-line subscribers in the country (about 11%). ADSL services, which are subsidized by the Egyptian government, are offered at prices lower than US$6 and are the cheapest in the Arab region for the 256Kbps speed. In addition to the low Internet rates, illegal neighborhood networks are ubiquitous in Egypt. Market players estimate that each ADSL connection is shared by an average of four units. This has contributed to increasing Internet and broadband adoption in the country.
Exhibit 2: Mobile and Internet penetration in Egypt, 2008-2015
*with a 15-month contract. Source: Pyramid Research
Pyramid Research estimates that the ban on Internet services in Egypt has directly cost the economy about $5m, and the ban on mobile services for one day has directly cost the economy more than $14m. The indirect costs of the ban on connectivity in Egypt are substantial, as many businesses depending on online presence and cellular services have been affected.
These developments raise several crucial questions for the future of the Egyptian ICT sector:
- What is the upcoming political landscape of the country, and how will it affect the ICT sector?
- Will there be further restrictions in terms of ICT access and usage?
- What about government initiatives to increase ICT adoption and subsidize ICT services? Will these come to a halt, or will future governments include it in their agenda?
- How will these changes affect the operations of current ICT players?
Whatever the outcome of the unrest in Egypt, we expect continued growth in the country’s telecom sector, and social networks, with their need for more and more data usage, will be one of the main drivers of growth.
Pyramid Research continues to follow the Egyptian telecom market closely and will provide new, in-depth analysis in our upcoming Country Intelligence Report on Egypt. Click here to pre-order the report.
— Hussam Barhoush, Senior Analyst, AME
Africa & Middle East Mobile Data Forecasts
Forecasts published quarterly
Our Mobile Data Forecast products provide complete pictures of demand trends for 17 geographical markets in Africa and the Middle East. The Excel output includes five years of historical data and five years of market projections for metrics such as penetration, mobile subscriptions (by type of package, by operator or MVNO and by network technology), users of specific data services (SMS, music, etc.), MOU, ARPS (by operator, by subscription type, by service, by application) and revenue (by messaging and non-messaging applications). The Forecasts are based on extensive field research and use a consistent methodology, aiming to capture the total spending on mobile data services in each market. Data from these Forecasts is available online for subscribers to our DataTracker service.
Tunisia: Orange Tunisie Has a Head Start as 3G Competition Heats Up
Country Intelligence Report published October 2010
The Tunisian telecom market will contract at a slower pace to $1.77bn in 2010, but then bounce back and reach $2.29bn in 2015, expanding at a CAGR of 5.3%. Among significant market segments, the fastest growing will be broadband Internet and mobile data.
Africa & Middle East Mobile Demand Forecast
Forecasts published quarterly
Our Mobile Demand Forecast products provide complete pictures of demand trends for 25 geographical markets in Africa & Middle East. The Excel output includes five years of historical data and five years of market projections for metrics such as GDP, mobile penetration, subscriptions (by operator, type of package, technology), ARPS and total mobile service revenue (data and voice). The Forecasts are based on extensive field research and use a consistent methodology across all markets, aiming to capture the total spending, from an end-user perspective, on mobile communication services in each market. Data from these Forecasts is available online for subscribers to our DataTracker service.