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morocco’s telecom miracle stalls
an early member of the wto, a free trade associate
of the eu and a candidate for a free trade agreement with the us,
morocco seems to be one of the more dynamic countries in a relatively
static region. but moroccan entrepreneurs now complain that government
inaction and behind-the-scenes personality clashes are crippling
the growth of the country’s it and telecoms sector, which had
gotten off to so promising a start.
not so long ago, the story of morocco’s advance into the information
age was the stuff of legend in the industry. although it was a latecomer
to the internet and mobile phone technology (with surprisingly low
penetration rates until 2000), the industry has boomed over the
last three years.
in the late 1990s, the government created an independent telecom
regulatory body, headed by reform-minded technocrat moustafa terrab,
and reinvented the state phone operator as an independent company
(with the government as a shareholder), re-branded maroc telecom,
in the hope of catalyzing the privatization of the industry. by
the time terrab had organized the sale of the first private gsm
license in 1999, foreign investors were so confident in the moroccan
market that the world’s top telephony companies fought hard
to be the first ones in.
the winner, a consortium led by spain’s telefonica and portugal
telecom, paid a hefty $1.1 billion for the license – the highest
amount ever paid anywhere for a mobile-phone license. to put it
into context, the price tag was five times that of egypt’s
first gsm license, bought by mobinil – even though morocco
has only half the population that egypt does. when the new consortium
began operations in early 2000, the number of mobile subscribers
expanded exponentially, taking it past the number of fixed subscribers
in only eight months.
at the end of 2000, it was france’s vivendi universal’s
turn, grabbing a 35-percent share and management rights in maroc
telecom for $2.3 billion. even when vivendi universal later ran
into financial troubles, it decided to keep its shares in the company
– a move widely interpreted as a sign of confidence in maroc’s
long-term prospects.
it was at that point, however, that things went wrong. a dispute
emerged between terrab, of the national telecommunications regulatory
body, the agence nationale de réglementation des télécommunications
(anrt), and nasr hejji, morocco’s secretary of state for information
technology, over the speed and scope of sectoral reform. terrab
resigned soon after, and now heads the world bank’s telecom
regulation project. a planned second fixed-license sale, meanwhile,
scheduled for 2001, dragged on for over a year, but when the license
finally came on the market, september 11, along with the dot-com
bubble burst, ensured that morocco found no buyers.
although bad timing played a role, the license was also viewed as
fundamentally flawed by industry observers. it demanded near-universal
coverage of morocco – an expensive investment considering the
overwhelming majority of the country’s money is concentrated
in rabat, the administrative capital, and casablanca, the business
hub.
gsm growth continued unabated, with over 6 million subscribers for
a country of 30 million, the highest penetration rates in the arab
world outside the gulf. but these high figures obscured less rosy
news in other fields. the number of the country’s fixed lines,
for example, actually decreased in 2000, as many lower-income users
migrated from fixed to pre-paid mobile lines. even now, the number
of fixed lines has barely gotten back to the levels seen three years
ago.
meanwhile, many industry insiders claim that the anrt’s vagueness
vis-à-vis interconnection fees with maroc telecom have served
to stunt liberalization. since any new entrant’s success depends
on the price of access to its local loop (the “last mile”
of telephone infrastructure that connects to the end user), investors
didn’t want to take a leap into the unknown.
besides, they could point to the example of maroc telecom and meditel,
still locked in a bitter dispute over interconnection rates, which
are, basically, the fee one operator must pay to another when a
call comes in from its network. in most cases, when a new operator
comes into a country in partnership with a historic – i.e.,
monopoly – operator, interconnection rates are maintained at
a high level, so the new entrant can recover costs quickly.
but in morocco, interconnection rates are well below the world average,
meaning that newcomer meditel must expect to recoup its investment
over a longer period than originally planned. after the telecom’s
appeal to the anrt to raise the rates was turned down, it brought
a lawsuit against maroc telecom, but the case has dragged on in
court without adjudication. meditel feels that the anrt – which
until this summer had not held a meeting for several years –
has failed to act as an impartial regulator should. “morocco
was a reference case for telecoms,” says ramon encison, meditel’s
general director. “but the authorities have to wake up. for
the government, the telecom sector is a source of revenue –
that’s all. there’s no strategic aspect to their thinking.”
encison, along with many other entrepreneurs in the sector, laments
the increasing closeness of maroc telecom, the anrt and the government
– a trilateral relationship exemplified by the fact that several
anrt board members are government ministers while three others sit
on the board of maroc telecom as well. the ceo of maroc, abdeslam
ahizoune, also headed the company before vivendi universal became
a shareholder, when he was also telecommunications minister. ahizoune
is highly influential in the sector, but many observers feel his
continued presence is harming the local industry’s reputation.
“ahizoune was ‘mr. telecom’ for many years, and can’t
seem to bear the idea that he might control less than 85 percent
of the market,” opined one industry watcher.
as one might expect, maroc telecom sees it differently.
“the law says that interconnection rates must reflect costs,”
says muhammad hmadou, the company’s director of network and
services. “do you think that it’s normal that meditel
wants to increase them while around the world they are getting lower?
our interconnection rates reflect real costs. meditel wants to live
off interconnection rates, but maroc telecom is not a cash cow.”
it’s not only in the market for telephony that maroc is resented.
many blame the company for also limiting internet penetration rates,
which remain at a paltry 60,000 due to prohibitive communication
prices. although morocco saw a small internet boom in the late 1990s,
with dozens of small isps setting up shop, most of these closed
within a year, unable to compete with maroc telecom’s natural
advantages. “the cost of connecting to the internet in morocco
is eight times that of france,” complains karl stanzick, the
head of mtds, the first isp in morocco and one of the few to survive
– largely because it operates more as a solution provider to
corporate clients than a general public isp. “that’s limiting
the market’s growth, all because maroc telecom would rather
make a lot of money from a few users than a little money from many
users.”
but again, maroc telecom begs to differ. “the accusation that
we are blocking internet growth is very unjust,” said françois
lucas, maroc telecom’s director of fixed and internet services.
he points to many offers maroc telecom’s internet brand, menara,
has put on the market, such as a pc bundle sold for 3,700 moroccan
dirhams ($370). he explained that morocco’s high prices are
due to uncertainty about the market’s elasticity, and doubted
that lowering prices would create a rush of new users. “the
internet right now isn’t very lucrative,” he explained,
blaming the lack of quality content targeted specifically to moroccans.
at any rate, king muhammad vi appointed a new head of the anrt in
september, and industry players are hoping that this will mean an
end to the regulator’s inaction and an incentive to further
liberalization.
a few days before the appointment, on the same day that it announced
the sale of its entertainment branch to nbc, vivendi universal said
it would exercise its option to buy another 16 percent of maroc
telecom. according to sources at the anrt, a new license is likely
to be put up for sale soon after the purchase goes through –
this time, with much tougher obligations for the investor. the new
license may well be a global one, allowing competition on both fixed
and mobile networks.
while it’s unlikely to fetch the same prices as the first gsm
license did (one anrt source estimated that about $100 million would
be about as much as the country could expect), it may help put the
wayward sector back on track, after its very promising start.
issandr el amrani
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