Tightly controlled GSM duopoly stifles Syrian market growth
With a mere 1.12 percent penetration rate in the year 2001, the Syrian GSM market is well under its true potential, asserts a newly released report from the Arab Advisors Group. The tightly controlled Build-Operate-Transfer (BOT) GSM duopoly in the Syrian communications market is considered to be the main reason behind such sub-optimal growth.
The Arab Advisors Group estimates that the local communications market—composed of a fixed services monopoly operator, Syrian Telecom Establishment (STE), and two GSM operators Syriatel and Spacetel Syria— is currently waking up from its slumber, albeit at a slow rate.
STE still has to contend with a waiting list for phone lines that is more than 150 percent of telephone lines in operation. Towards that end, extensive infrastructure upgrade projects are underway by the Establishment. STE nonetheless remains in the centrally planned model of telecom operators, which is all but extinct in many regions of the world.
The report found that while mainline (PSTN) penetration stood at a respectable 10.57 percent in 2001, despite the high waiting list, Syria’s Global System for Mobile communication (GSM) market is one of the least developed of all Arab markets. There were fewer than 200,000 GSM users in the country of more than 17 million people, a dismal penetration rate by all means.
“Very high connection charges and lack of prepaid service offerings are the main culprits behind stifling the potentially high growth in GSM subscribers in Syria”, Analyst Sarah Alalul explained. “Evidently, people able to afford a mobile are primarily business people and government officials.”
“Mobile usage will not increase until there is a significant drop in connection fees,” Alalul said. “At $390 in connection fees, Syria's mobile operators charge 20 times more in connection fees than what mobile operators charge in Jordan, for example.”
The Arab Advisors Group report shows that the two GSM operators in Syria, Syriatel and Spacetel Syria, are required to negotiate with the STE on every effort to change prices and allow competition of any sort. They therefore can only compete on quality without much leeway in offering bundles and lower rates. The absence, to date, of prepaid service is another major hurdle facing mass adoption of mobiles in Syria.
As the duopoly operators anticipate the introduction of prepaid mobile service at the end of this year, pending an STE approval, GSM usage is expected to increase exponentially as have other Arab countries' mobile subscriber bases upon inception of prepaid, including Morocco, Egypt, Lebanon and Jordan.
The Arab Advisors Group projects Syria’s GSM subscribers to exceed 4.5 million in 2006, a 22.86 percent penetration rate. “Year 2006 is when we project GSM subscribers to reach parity with PSTN subscribers.” Alalul added.
The Syria Communications Projections Report 2002 also includes analysis of the average revenue per user (ARPU) for GSM and PSTN users in Syria and revenues projections until 2006. The Arab Advisors expects total GSM revenues in Syria to exceed $430 million by 2003.
Between 2001 and 2006 the Arab Advisors Group projects GSM subscribers in Syria to grow by a CAGR (Compound Annual Growth Rate) of 88 percent to exceed 4.5 million while total GSM revenues will grow at a lower CAGR of 54 percent to exceed the one billion dollar mark by 2006.
As for PSTN services, given an expanding subscriber base, and a steady ARPU, revenues are projected to grow by a CAGR of 21 percent between 2001 and 2006 to exceed $854.25 million. — (menareport.com)
© 2002 Mena Report (www.menareport.com)