The allocation of a new 3G license in Algeria is forecast to spur 10-12 per cent annual growth in mobile subscribers.
Mobile telecoms set to finally take off in Algeria
Algeria's mobile telecommunications industry is tipped for 10 to 12 per cent annual growth in subscriber numbers, despite having been mired by years of uncertainty.
A long delay in the allocation of 3G mobile licences, which were expected to be issued in 2008, has led to a price war among Algeria's three mobile operators, as growth in subscribers slowed to a trickle.
Beyond that, a row between the government and Egypt's Orascom Telecom, which owns the Algerian telecoms company Djezzy, has left the largest mobile operator in a state of limbo.
But analysts say the industry appears ready for a shake-up, with signs that the much-delayed tender of 3G mobile licences is finally set to go ahead at the beginning of next year.
Mai Barakat, an analyst for the Middle East and North Africa region at Informa Telecoms & Media, based in London, said Algeria's mobile subscriber base was growing by about 3.5 per cent a quarter up to June 2009.
But now the rate of growth is as low as 0.5 per cent a quarter, she said. "Over the last year, the growth hasn't even reached 2 per cent quarter-on-quarter. So it has really slowed down," Ms Barakat said.
However, the launch of the 3G licences are forecast to spur growth in Algerian mobile penetration.
"We do see a big jump in subscription growth when 3G comes in," Ms Barakat said.
"We're looking at it to jump to about 10 per cent on an annual basis. That will grow to around 12 per cent, and then it will start to decline again from December 2013."
Other analysts agreed that the 3G licence launch would help to boost subscriber numbers.
"Growth will be higher now 3G will be adopted in Algeria," said Majd Al Amarin, a research analyst at the Arab Advisors Group. "I think this will affect the mobile market in a positive way, leading to more subscribers and more market share."
Abbas-Zouhir Abdallah, the Algerian country director for the telecoms infrastructure firm Nokia Siemens Networks, said there was already strong demand for data services in the country.
"There is a clear need for bandwidth expansion with the mobile penetration rate growing exponentially from 15 per cent in 2004 to nearly 92 per cent in 2010," he said.
"There has been strong uptake of smartphones and subscribers are demanding more data-intensive services than ever before. We anticipate the Algerian government will be taking a decision on 3G or even skip this and transition straight to 4G by next year."
The specifics of the 3G mobile licence tender is expected to be available in the middle of next month. It is expected that the tender will go ahead early next year.
The country's three mobile operators - Orascom Telecom Algeria, Algerie Telecom Mobile and Wataniya Telecom Algeria - are all potential bidders for the licences.
"The three operators have expressed interest in the 3G technology," Ms Al Amarin said.
Launching 3G services will help to spur demand for mobile internet, which is too slow on current mobile networks, Ms Barakat added.
"Bringing in faster data services and mobile broadband will actually push growth in the market quite a bit," she said.
Ms Barakat said this would also help to boost the average revenue per user (ARPU).
"It will generally help operators move away from the current state they're in, which is a lot of price competition on voice," she said. "It will help declining ARPU and allow for more subscription retention - there's a lot of price competition going on, and people switch very easily from one operator to another."
Yet uncertainty remains for Orascom's lucrative subsidiary Djezzy, the largest mobile operator in Algeria. Djezzy has been in limbo since Algeria's government announced plans to nationalise it. The unit has also been hit with hundreds of millions of dollars in back taxes, and banned by the government from moving some profits abroad.
Orascom faces "ongoing uncertainty over Algeria", the brokerage Nomura reported in a research note issued this month.
"Djezzy's performance is increasingly fragile," Nomura said.