Analysis of Telecom Mobile Market in Egypt

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Analysis of Telecom Mobile Market In Egypt

Agenda
• • • • • • • • • • Objective Market background Type of Market & Market Shares Factors of Production Demand Supply Factors Affecting the market Elasticity Efficiency Future Expectations

Objective
The objective of this research is to shed light on the mobile Telecom market in Egypt during the period 2002-2006 and study its demand, supply and elasticity.

Introduction
• Telecom sector plays a critical role in economic growth and is key in attracting FI; (according to the World Bank: Investments in African telecom companies are generating annual rates of return in excess of 25%.)

• Egypt’s telecom revenue represents an estimated 4.0% of its GDP with mobile revenue generating 56% of it • Growth rate of mobiles penetration jumped from 6.6% to 25% during 2002-2006; while the (GDP) growth was much less

Market Background
• MobiNil was the first operator in the Market (May, 1998) • Vodafone followed by November 1998 • Then Etisalat by May 2007

Market Background (cont’d)
• By Q2 2008, the Market share of the three operators was • The market can be considered as Monopolistic competion MobiNil Vodafone Etisalat

Source: MCIT, NTRA & Global Research

Market Background (cont’d)
• By end of 2006, the Market share of the two operators was

MobiNil Vodafone

Source: MCIT, NTRA & Global Research

• 1) Population evolution and potential market growth, • 2) SIM penetration vs. active clients, • Fixed line deployment is low and slow-to-grow in developing countries; that said, penetration was also low in France, Portugal and Italy in early 1970s. • In short, mobiles - unlike personal computers (PCs) and wireline networks - are being rolled out at a faster rate in developing countries than developed ones, thereby "closing the 'digital divide'."

Factors affecting the market
• GDP
7.10% 7.20%

6.80%

4.50%

3.60%

2005

2006

2007

2008

2009

Factors of production

Backward Market Labor Physical capital Human capital Entrepreneurship Production

Forward Market Mobile Lines Data Lines USB Modems Recharge Vouchers

Efficiency
Using all the resources you have without any loss is the optimum efficiency but in the mobile market the case is a little bit different as we cannot wait to reach the maximum network capacity so we must shift the PPF to outside by increasing our resources (Labor, Machines) and introducing new technologies that increases the output obtained from a given amount of resources

Efficiency (Cont)

Total Market Demand Curve
Total Demand Curve
120

100

80

Price for line

60 Total Demand Curve 40

20

0
4.5 5.8 7.7 13.6 18 Quantity per year in Million

Mobinil Demand Curve
120

Mobinil Demand Curve

100

80

Price for line of Mobinil

60

40 Mobinil Demand Curve" 20

0 2.4 3.1 4.1 7.5 9.3

Quantity per year in Million

Total Market Supply Curve
Total Supply Cruve
120

100

80

Price for line

60 Total Supply Cruve 40

20

0
6 8 10 Supply Quantity per year in Million 15 20

Mobinil Supply Curve
Mobinil Supply Curve
120

100

80

Price for line of Mobinil

60 Mobinil Supply Curve 40

20

0
3.1 4.2 5.3 7.9 10.6

Supply Quantity per year in Million

Factors affecting the market
• Complementary products
– Mobile Handsets – New services & applications

Factors affecting the market (Cont)
• Offers & Promotions
– Special segment such as the minute rate for prepaid customers and bonuses upon recharge – Specific occasions such as free minutes or discounted rates on the Valentine day or Feasts, Thanawaya amma free line for the succeeded students

Factors affecting the market (Cont)
• Sponsorship & deals
– Sponsoring football teams like the sponsorship between Vodafone & Al Ahly – The deal between Mobinil & Apple for the iPhone

Factors affecting the market (Cont)
• Difficulties in the substitute products
– The fixed lines are...
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