The primary opportunities for value generation for mobile network operators (MNOs) will be in encouraging customer migration to 4G/5G and the introduction of new and improved advanced services, according to Fitch Solutions.

Sustained investment into widening the coverage of 4G (and later 5G) network infrastructure will be essential to the discarding of more primitive technologies, particularly in rural areas which are responsible for a large portion of the current high levels of demand for 2G.

2G remains the dominant form of access technology in Morocco, accounting for around 45 per cent of total mobile connections at the end of 2021, though advancing 4G uptake will see the latter become the principal technology by the end of 2022.

According to Fitch Solutions, 5G is unlikely to become a mass market proposition by the end of the decade as its deployment will be limited to major metropolitan areas given the high cost nature of infrastructure for operators and of 5G-enabled devices for consumers.

“Currently, our expectations for 5G in Morocco are weighed down by a relative lack of progress; the National Telecommunications Regulatory Agency (ANRT) has outlined 2023 as the year for the first 5G spectrum auction. We expect nearly 30% of the mobile market, or 19.75 million connections, will be on 5G in 2031.”
Fitch Solutions

Morocco’s mobile market is heavily reliant on the low-value prepaid segment, which Fitch Solutions estimates made up more than 88% of the country’s mobile customer base in Q1 2022.

As a result, additional value could be tapped by operator attempts to make their postpaid offerings more attractive. This is despite the fact that low incomes and sluggish economic growth in the wake of inflationary pressures and weak harvests will weigh on this prospect somewhat, Fitch noted.

Migration of Customers

Migrating customers to postpaid plans will support the elevation of Morocco’s average revenue per-user (ARPU), much-needed after their hastened decline over 2020 and 2021. Between March 2019 and March 2022, its ARPU has fallen from MAD56.8 to MAD44.9.

There are three Mobile network operators (MNOs)- MarocTélécom, Orange and Inwi (Wana)- each operating their own network infrastructure. Given Inwi’s rapid acquisition of market share- indicating it has undertaken tough competitive pricing- it is likely that both Inwi and Orange have also seen their ARPUs erode.

Morocco’s telecommunications market is mature, with an estimated mobile penetration rate of 136.8 per cent in Q1 2022 and a subscriber base of nearly 51.68 million connections.

Inactive and tourist-owned SIMs are likely to contribute towards a notable proportion of the total figure, the latter only set to increase as holidaymakers begin returning to Morocco.

Mobile is still the main medium for accessing high-speed Internet services; the fixed broadband market in Morocco is restricted by the absence of local-loop unbundling and as such wide-scale availability of ADSL has always been limited, an issue that has proved contentious and not without legal intervention.

Outlook of Morocco’ Mobile Market

In the short-term Morocco’s mobile market will continue to be subject to a degree of volatility given the high levels of saturation and removal of inactive SIMs from the market. MNOs will see this reflected in volatile customer bases exacerbated by a competitive pricing strategy largely led by Inwi.

These trends will weigh on revenue growth and profitability, which operators will need to manage effectively if they are to tap into the 4G/5G opportunity and demand for data services presented by Morocco.

Looking to the long-term, Morocco’s rising incomes and young demographic add upside risk to the adoption of advanced technologies, as does the growing affordability of data and smartphones.

Infrastructure sharing would vastly accelerate this trajectory, though the MNOs seem reluctant at present but this could change once roll out of 5G cell sites is permitted and operators become keen to realise faster returns on investment.

The general softening of attitudes towards network infrastructure among the MNOs is likely to catalyse momentum in the local towers industry and we suspect Helios Towers and IHS Towers to emerge as key contenders there.