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Summary

In early June, Meditel, Morocco’s second-biggest operator, launched LTE, making Morocco the first market in North Africa to offer LTE commercially. The operator launched in the country’s big cities, and its LTE plans are not priced at a premium, in a bid to encourage take-up of services. Meditel’s first-mover advantage was short-lived, however: Inwi launched LTE a week later with much broader coverage, and Maroc Telecom is set to launch by mid-July with spectrum that allows for LTE-A. Neither Inwi nor Maroc Telecom is planning on charging a premium for 4G, indicating a competitive future for the LTE market in Morocco.

Meditel set to face strong competition

All three operators in Morocco gained their 4G licenses in April 2015, but Meditel, which paid $50m for its LTE spectrum, was the first to launch, doing so initially in Casablanca and Marrakesh. It plans to launch in Rabat by July 17 and in other large cities by September 2015. Under its LTElicense conditions, Meditel is required to cover 65% of the population within the next five years. The service was available free during the launch phase (which has now ended) with the purchase of a new SIM card, priced at $3.07, along with a compatible handset.

The launch marked the first LTE service to become commercially available in North Africa, which is no surprise considering that Morocco is one of the more developed markets in the region. At end-1Q15, the country’s SIM penetration exceeded 140%, and 3G subscription count grew 33% in the 12 months to end-1Q15, to 4.6 million. In addition, it has a young population that is very tech-savvy, and all three operators have pushed smartphone take-up by launching own-branded low-cost options.

Meditel is in a good position to do well with LTE, with a strong brand and a solid position in the highly competitive market: Its market share has grown from 29.87% at end-1Q14 to 31.80% at end-1Q15, maintaining a second-place ranking. In addition, Meditel is pricing LTE at no premium to 3G, with mobile Internet plans costing the same for 3G and 4G access, which will stimulate LTE adoption. But Meditel has had to face competition from Inwi since only a week after launching: Inwi launched LTE on June 17, and with much greater coverage – 26 cities. The operator is also offering a prepaid 3G or LTE SIM with 2GB of data valid for two weeks for MAD50, meaning that it too is not pricing LTE at a premium.

Although tariffs indicate a market that will see strong LTE take-up and competition, the main factor hindering growth is handset pricing. The cheapest LTE-enabled handset available is priced at MAD1,320 ($134) via Meditel, which is still unaffordable to many. In comparison, the cheapest 3G handset is priced at around $73. Launching own-branded LTE handsets at a lower cost than the top-tier brands currently available could give the operators a boost in LTE take-up. Meditel could learn from Orange’s experience of launching the Alcatel OneTouch Pixi 2 handset at $60 in other African markets.

Own-branded handsets are one strategy with which Meditel can fight off competition in LTE, a move that will be key to its growth after the Maroc Telecom launch. Maroc Telecom is looking to have LTE in service by mid-July and also does not aim to charge a premium. It poses a threat due to its market leadership, strong financial backing from Etisalat, and spectrum that allows for LTE-A. The operator has not announced any plans to launch the advanced service but is the only operator in the market with the necessary spectrum, having paid MAD1bn for the most sought-after frequencies, compared with Inwi’s and Meditel’s spends of MAD500m each.

Meditel and Inwi are going to have to look at how to develop their LTE strategy to combat the possibility that Maroc Telecom will launch LTE-A to gain a competitive edge. The threat will be even more evident should Maroc Telecom use its LTE-A service to partner with OTT players such as Skype, Viber, and Tango, which are all popular in Morocco.

Any of the three operators could still take the lead in LTE market share, but one thing is clear: The LTE market in Morocco is set to be a competitive one, and take-up will grow, boosting operators’ data revenues.

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