Egypt: A Hotbed For Mobility
The Egyptian telecom industry is one of the fastest growing markets in the Middle East and North Africa. In particular the country is better positioned over regional peers due to the following:
- Robust and developed telecom and mobile sector with growing demand.
- Liberalized telecom and mobile sector open to competition.
- Introduction and continuous upgrading to technology i.e.3G, 3.5G.
- Local telecom and mobile operators with growing regional footprint.
- Forecasted GDP growth of 6-7% in the next 3-5 years.
- Steady population growth of 1.5% per year.
Growth of the telecom sector has been nearly six times that of the economy. Telecom revenues represented approximately 1.6 percent of Egypt’s GDP in 1998. In 2005, though telecom revenues of LE 19.44 billion (US$ 3.39 billion) were 4.2 percent of GDP, according to an HC Brokerage Report.
Within telecom, the mobility sector has been flourishing since the first license acquisitions in 1998 and has consistently grown by 30 percent per year. Recently, growth has been even more rapid, as 2005 saw the fastest growth ever when the number grew by 69 percent.
Looking forward, the focus of the mobile operators will be on implementing higher speed networks as evidenced by Vodafone Egypt’s rollout of 3G and Etisalat’s 3.5 G and specialized applications to give to their customers (also known as value added services).
The rise of mobile value-added services in MENA is already evident from the proliferation of mobile ringtones and logos and the emergence of services such as mobile TV.
While exact figures for Egypt have yet to be determined, the current market for mobile value-added services in the Middle East is estimated at US$ 350 million. This is distributed across the various players along the value chain - mobile operators, content providers, and applications developers.
Mobile operators also recognize that applications development goes beyond their core business operations and look to small, medium, enterprises (SMEs) as channels of innovative products and sources of new ideas. Likewise, handset makers support development of localized applications and content in order to offer bundled applications for handsets sold in regional markets.
Already Egyptian SMEs have proven their skill in developing mobility applications and platforms. One company developed Vodafone Egypt’s full-scale version of the Vodafone Live! platform (fully integrated with Vodafone Live! worldwide platform guidelines) to enable customers to receive enhanced mobile content and applications over Vodafone Egypt’s 2G and 3G networks.
Other companies have developed full suites of Arab language and Islamic related content localized operating system, organizer, game, and dictionary that has already been bundled onto devices for manufacturers such as Nokia, Samsung, Motorola, and iMate.
Local mobile operators are also willing to invest directly into SMEs. This trend will continue as operators increasingly look toward entrepreneurial SMEs for specialized value-added services. Vodafone Egypt, for instance, has an investment arm that directly funds local SMEs, Vodafone Ventures.
Booming regional mobile markets also present ample opportunities for Egyptian SMEs to introduce mobility-related applications to a wider audience. These applications can serve both the growing mobile subscriber base and demand from businesses. Considering that Egypt is one of the largest mobile markets and OTH the largest operator in MENA, the country and in turn Egyptian SMEs are positioned to capture a lion’s share of the market.
Growth of mobile value-added services will be even faster in the coming years as users continue to take up new applications and mobile operators continue to focus on other ways to better compete and offer new products to their subscribers - namely, mobile content and services. This is in addition to the regional expansion opportunities that Orascom, Etisalat, and Vodafone can bring to Egyptian SMEs.
By 2011, it is expected that 70 percent of global mobile revenues will come from data and by 2015 this figure should reach 90 percent.
As demand continues, mobile operators will continue to look to SMEs as a source for innovative applications for both the local market and for regional and global expansion.
Further, demand from businesses to adopt mobility solutions ranging from mobile marketing to field service applications to location-based services to serve Egypt’s tourism sector will continue to heat up the mobility market.
As a result of market opportunities, Egyptian SMEs can take advantage of the growing “sweet spot” and further develop applications in the following areas:
- Mobile customization.
- Mobile marketing.
- Mobile business-related applications.
- Location-based services.
- Arab language content.
Egypt's sizable youth population -58 percent of the population is under 25 presents strong market potential for customization and mobile marketing. The youth market extremely valuables customer segment as data shows that this group is the most mobile group of customers. Estimated MENA region mobile marketing revenues are projected to grow by 25 percent annually through 2010.
Egypt with its historic role as a regional media hub in the Middle East is well positioned to be a market leader in the development of Arab language content for mobile applications.
The investment outlook is also bright, as investors have a chance to get in on the ground floor of a booming sector. Egypt’s talented crops of SMEs are an ideal investment vehicle due to the key role they play.
As content providers and applications developers, Egyptian SMEs are the drivers behind these new value-added services introduced by mobile operators and other sectors. Overall, the depth and variety of expertise on the part of Egyptian SMEs, coupled with Egypt’s booming mobile sector, makes the country a hotbed for mobility.
Posted by ROOT Technologies