Morocco: Maroc Telecom losing ground to market challengers Inwi and Orange

By Quentin Velluet
Posted on Friday, 12 November 2021 17:19

Chief Executive Officer of Maroc Telecom at his office in Rabat, 31 march 2017. © Vincent Fournier/JA

Morocco’s leading telecoms player has seen its customer base diminish following a series of regulatory decisions reached since 2020. However, the changed landscape is creating new opportunities for Inwi and Orange, with both companies making gains across the board.

Abdeslam Ahizoune has been at the helm of Maroc Telecom Group since 2001, and in February 2021, his term as chairman of the management board was extended to 1 March 2023. Over the last two years of his tenure, however, the legacy operator has lost a bit of ground. Inwi and Orange, long portrayed as competitors hampered by Maroc Telecom’s dominant position, appear to be picking up market share in Morocco.

‘Competitive and regulatory environment’ to blame

Even so, in its earnings release for the third quarter of 2021, market leader Maroc Telecom reported a strong and stable adjusted EBITDA margin of 51.6% on revenues that were down just 1.9% compared to the same quarter in 2020. The company further said its performance “continues to suffer from the repercussions of the competitive and regulatory environment”.

This was in reference to the blow dealt by Morocco’s telecommunications regulator in late November 2020, when the authority made public its decision to lower the interconnection rate for mobile operators. On 1 December 2020, the rate fell from 0.03 dirhams ($0.0082) to 0.01 dirham on a per-SMS basis, diminishing an important revenue stream for the top industry player.

The ruling followed separate regulation, which has been pushing mobile and fixed-line termination rates downwards. Maroc Telecom predicts a 35% rate drop by 2022, in contrast to a 25% rate reduction for its competitors.

Loss of market share

According to figures published by Morocco’s National Telecommunications Regulatory Agency (ANRT), Maroc Telecom’s market share fell by 4% in terms of number of mobile subscribers, whereas Orange Maroc’s was down 1.3% and Inwi’s up 5.4% between the first quarter of 2019 and the same period in 2021. However, Maroc Telecom’s biggest market share losses were in its mobile and fixed-line internet segments. In a span of two years, the company – whose parent firm is UAE-based Etisalat Group – reported a 12% decrease in market share for mobile internet services and nearly 13% for fixed-line internet.

While Orange and Inwi have in fact expanded their subscriber base, it would be interesting to find out whether that has translated into better overall financial performance…

Meanwhile, its competitors have made continuous gains in both segments. “Because Maroc Telecom doesn’t share its infrastructure with other operators, Orange and Inwi built their own fibre-optic networks. Today, they’re in a position to offer services at a more competitive price,” says an executive from a Casablanca-based telecoms consultancy.

Of its two market challengers, Inwi is reaping the most benefit from the regulatory changes, reporting a mobile internet market share of upwards of 35% for the first quarter of 2021, compared to just over 26% for Orange. To boost its position, Inwi, which appointed former ANRT head Azzedine El Mountassir Billah as chief executive in September 2020, reinvested 2bn dirhams (approximately $217m) annually over the last five years of ex-CEO Nadia Fassi Fehri’s term. This strategy has enabled the company to enter new segments, including mobile payments, cybersecurity and business-to-business data management.

Market share numbers don’t tell the whole story, however, as our source from the Casablanca telecoms consultancy says: “While Orange and Inwi have in fact expanded their subscriber base, it would be interesting to find out whether that has translated into better overall financial performance, but ANRT doesn’t provide the data necessary for such an analysis. […] Maroc Telecom continues, on balance, to dominate the market, but I can’t say this for sure without more specific data.”

Still a blue chip

Despite maintaining its dominance, the leading operator will have to come to terms with an idea beginning to gain ground with Morocco’s political class: the gradual breakup of oligopolies in various industries in order to revitalise entire sectors of the country’s economy. This was presented by the Commission spéciale sur le modèle de développement, a group of experts presided by Chakib Benmoussa and tasked with proposing a new model of development for Morocco. The commission’s June 2021 report to King Mohammed VI observed that “regulatory shortcomings in some sectors bolster oligopolies and anti-competitive practices, making it difficult for new players to enter markets”.

Maroc Telecom has managed to maintain its blue-chip status on financial markets thanks to the growth of its subsidiaries in sub-Saharan Africa, which has offset its domestic slowdown. The company was also boosted by Etisalat’s decision to increase its existing stake to 53%. Finally, it is innovating to drive up data usage. In July, for example, it launched MT TV, a video-on-demand (VOD) service available on mobile phones and smart TVs. Created in partnership with the French television provider Molotov and the payments firm Digital Virgo, the service offers 80 channels and a wide array of VOD content.

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