Developing Telecoms | Political risk throughout North Africa may temper short-term growth

23 May 2012

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Political risk throughout North Africa may temper short-term growth

Wednesday, 25 January 2012 15:57 | Anne Williams

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Uncertainty pervades all four North African states – and, by extension, their telecom sectors, according to BMI. Conflict continues in Libya and, although an interim government is now in power, it lacks the ability to begin to seriously tackle the country's massive social, economic and infrastructure problems. There is no indication of how amenable the new government will be to a free and open telecoms sector. Elections are scheduled in Tunisia for late October, and while the process of transition has been remarkably smooth so far, the possibility remains that opposition to reforms could still materialise.

The political situation in Algeria is rather more stable, although there is considerable potential for sudden outbreaks of civil unrest that could unseat the government and the economy. The government's tough stance towards Orascom Telecom's ownership of mobile operator Djezzy and its continued harassment of that operator for unpaid taxes and price promotions do not bode well for future prospects regarding foreign investment in this market.

Djezzy has been valued at around US$7bn, but it seems that the government may baulk at paying a high price for ousting Orascom. Deliberations could continue for some time, which is unfortunate as Algeria will be tendering 3G licences in Q411. Djezzy must now consider whether or not to bid for assets that will only add to its value and therefore make it less appealing to the government.

Although political risks weigh heavily on the region, robust growth is forecast in the mobile sector in particular. Broadband is also expanding, although mobile broadband appears to be a real growth engine, particularly in Morocco. The effect of the upheaval is likely to be more long term, particularly in encouraging future outside investment and overall ICT policy.

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