After a bit of a dip in mobile subscriber growth at the end of 2008, the first half of 2009 has seen Egypt recover well, and the market seems to be on track for a strong growth figure for 2009. The second quarter particularly saw excellent net additions for the main mobile operators, Mobinil and Vodafone. Overall, the first half of 2009 saw 5.897mn new subscribers added to the market. This is fewer net additions than the first half of 2008, but with the market penetration creeping up, growth was always inevitably going to slow. The economic slowdown may have had some influence as well, but generally we do not believe that it has had a massive impact on the rate of mobile growth in Egypt.

The effect of slightly more difficult economic conditions than in recent years has been more noticeable in the mobile market in terms of ARPUs and minutes of use, both of which have gone down in the last couple of quarters. The general trend had been gently downwards for ARPUs, but these took more of tumble. Minutes of use, however, had been consistently climbing, but since Q408 they continue to fall.

This trend should begin to flip back around pretty soon, however.

Things are looking less good for the fixed-line market, although exactly how bad they are is hard to gauge thanks to differing sources of information giving pretty divergent data. Telecom Egypt, which still holds a complete monopoly on the fixed-line market in Egypt, said in its Q209 results that it had lost 1.862mn subscribers since the start of the year. This is something of shock to this system, since Egypt has a pretty healthy fixed-line market, with an unusually high penetration rate and an apparent resistance to the downward trend caused by the massive growth of mobile. This is still at least partially the case, as Egypt’s fixed-line network is still in place and still has the comparatively good reach that it had before. It just apparently has a lot fewer subscribers.

Despite these partial positives, the fixed-line market lacks competition, and BMI regrets the regulator’s decision to indefinitely postpone the auction of a new fixed-line licence. The market could still benefit a great deal if it was at least opened up to the wholesale market, allowing alternative operators to resell Telecom Egypt’s services. This is already the case with internet and data services.

Uptake of broadband has been growing steadily, though the high cost of both computers and broadband subscriptions is still a prohibitive factor for many individuals and families. Broadband connection sharing through Wi-Fi modems is reportedly common among neighbours who do subscribe, with two, three or even more households sharing the monthly bill. As mentioned above, there is some competition in the broadband market, with many resellers and some alternative technologies getting a look in. Telecom Egypt has been increasing its retail market share, however, which would suggest that competition is not functioning very effectively.