The Mobile Economy

Middle East and North Africa 2017

Copyright © 2017 GSM Association

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 Contents
EXECUTIVE SUMMARY 2

1 INDUSTRY OVERVIEW 9
1.1 Overall growth slowing but diverging trends across region 10
1.2 Migration to mobile broadband continuing 14
1.3 Growing adoption of smartphones and other advanced services 18
1.4 Revenue returning to growth 22

2 MOBILE CONTRIBUTING TO GROWTH, INNOVATION 25

AND SOCIAL DEVELOPMENT
2.1 Delivering growth and jobs 26
2.2 The platform for innovation across MENA 31
2.3 Addressing social challenges 40

3 POLICIES FOR A DIGITALLY ADVANCED SOCIETY 48

3.1 Advancing digital transformation 49
3.2 Modernising regulation: three focal points 50

Contents 1
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

Executive
Summary
Mobile adoption rising, but growth slowing

By mid-2017, there were 365 million unique other Arab States such as Comoros, Djibouti and
subscribers across the Middle East and North Somalia where less than a third of the population
Africa (MENA) region, accounting for 63% of the subscribe to mobile services.
population. Global subscriber penetration overtook
Subscriber growth rates will slow further over the
MENA during the course of 2015. As a result,
next few years due to the more advanced markets
MENA has fallen behind Asia Pacific to become the
approaching saturation, the challenge of growing
second least penetrated region in the world. There
penetration in the less developed markets, and
is, however, huge variation between countries in
unstable political and economic conditions in several
the region, from the advanced Gulf Cooperation
markets. As a result, subscriber penetration will
Council (GCC) States where 76% of the population
reach only 65% by 2020, below the global average
on average are mobile subscribers, to some of the
of 72%.

2 Executive Summary
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

Mobile broadband growing, with 5G coming soon

Subscribers in MENA are increasingly migrating to potential issues around affordability mean 4G will
mobile broadband services, with mobile playing a still only account for just over 20% of region-wide
crucial role in providing internet access given the connections by 2020.
general lack of fixed broadband infrastructure in
Looking further ahead, markets in MENA –
the region. By the end of 2016, mobile broadband
particularly some of the GCC States – will be among
connections reached parity with 2G, and by the
the first countries globally to launch 5G networks,
end of 2017 3G will become the dominant mobile
with commercial deployments planned in the UAE in
technology. By 2020, mobile broadband will account
2019 and Qatar in 2020. In the early years following
for just under 70% of total connections.
these launches, operators in 12 other countries
Expansion of 3G coverage throughout the region across MENA are expected to deploy 5G services,
is helping drive the uptake of mobile broadband covering around 30% of the region’s population
services, but delays in service launches, slow rollout by 2025. By this time, regional 5G connections
across most of North Africa, political instability and (excluding IoT) are forecast to surpass 50 million.

Revenue returning to growth

In 2015, the downward trend in revenue growth continue to monetise the strong growth in data
reversed, and increased further in 2016 largely traffic. However, growth will be modest due to
driven by the growth of 4G services across the further slowing of subscriber growth, ongoing
region. In the region as a whole, total revenue grew political and socioeconomic instability, increasing
by 1.6% in 2016, compared to growth of 1% in 2015 competition and the cannibalisation of traditional
and a decline of 2.5% in 2014. revenues by IP messaging platforms. Overall, total
revenue is expected to grow by 1.5% in 2017, and by
Revenue is likely to grow as more countries roll
an average annual growth rate of 1.9% between 2017
out or expand 4G networks and mobile operators
and 2020.

Executive Summary 3
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

Mobile contributing to jobs and economic growth

In 2016, mobile technologies and services generated The mobile ecosystem also supported more
4.2% of GDP in the MENA region, a contribution that than 1 million jobs in 2016. This includes workers
amounted to $165 billion of economic value. In the directly employed in the ecosystem and jobs that
period to 2020 we expect this to increase to almost are indirectly supported by the economic activity
$200 billion (4.3% of GDP) as countries benefit from generated by the sector. In addition to the mobile
the improvements in productivity and efficiency sector’s impact on the economy and labour market,
brought about by increased take-up of mobile it makes a substantial contribution to the funding of
services. the public sector, with $20 billion raised in 2016 in
the form of taxation.

Mobile driving engagement and innovation in the region

As smartphone adoption continues to rise in example), are looking to address challenges around
the region (just under half of total connections urbanisation, pollution and resource management
were smartphones by mid-2017) and as more by implementing smart city services, while others
users come online, an increasing range of mobile (such as Turkey) are spearheading initiatives to
services are being consumed, including video, provide individuals and businesses with secure and
social media, e-commerce and financial services. robust access to online services via mobile-based
The MENA region, particularly the developing solutions.
markets, will undergo a large shift in consumer
Mobile operators in the region are also increasingly
behaviour by 2030 as a combination of drivers
collaborating with tech start-ups to help scale
take hold, including rising smartphone and mobile
innovative and sustainable mobile services. By
internet adoption, improved affordability and the
supporting these new and innovative digital players
regionalisation of online content.
to secure the funding, resources and direction they
Mobile has emerged as the platform of choice for require to bring their products and services to scale,
creating, distributing and consuming innovative mobile operators are helping to deliver the most
digital solutions and services in MENA, and the impactful mobile solutions to those that need them
region is playing a leading role in certain areas. most, and generating the greatest socioeconomic
For example, some countries, particularly in impact.
the Gulf region (Saudi Arabia and the UAE, for

4 Executive Summary
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

Mobile helping address social challenges

The large-scale societal adoption and use of addressed, an additional 67 million people are
digital technologies is a key driver of measurable expected to gain access to the mobile internet
economic, social and cultural value, including across the region by the end of the decade, bringing
increased productivity, a rise in employment rates, the total to just under 300 million, or 48% of the
improved security, and greater capacity to tackle population.
social and environmental issues. Mobile internet
Given its reach of 5 billion people across the globe,
penetration in MENA has doubled over the last six
mobile is also playing a key role in tackling various
years, reaching just under 40% of the population by
social and economic challenges as outlined by
mid-2017.
the UN’s Sustainable Development Goals (SDGs),
Despite the steady progress, a vast digital divide including poverty, education, employment and
remains in many parts of MENA, particularly in the sanitation. Mobile technology provides access
developing countries: across the region, there are to tools and applications that help address
350 million people without access to the mobile these issues, and enables new technologies
internet. As challenges around infrastructure, and innovations to build more efficient and
affordability, consumer readiness and content are environmentally sustainable societies.

Policies for a digitally advanced society

Telecoms markets across MENA have changed Policymakers should strive to set policies that
considerably over recent years, with the foster competition and protect consumers, without
convergence of technologies and services and impeding technological, social and economic
the emergence of internet players and the digital progress. The focus should be on three key
ecosystem. However, the policy framework has areas: the rules governing the use and storage
not kept pace with this movement to a data- of consumer data; licence duration and renewal;
focused economy and has left aspects of telecoms and the costs incurred by mobile operators (for
regulation obsolete. Devised for an industry that example, licence fees, spectrum costs and sector-
no longer operates in the same way, policy is specific taxes). Tomorrow’s technologies must not
disproportionately focused on mobile operators be stifled by yesterday’s regulation. By updating the
who face competition from adjacent sectors that are regulatory framework, policymakers can ensure that
lightly regulated. This creates unnecessary market government and industry are aligned to create a
distortions and holds back an entire industry. growing digital society for everyone.

Executive Summary 5
 MOBILE ECONOMY
MENA
Unique SIM connections
mobile
subscribers

2016 360 million

2.6% CAGR 2016–20
63%

PENETRATION
RATE
2016 639 million 112%

399 million
2.7% CAGR 2016–20
PENETRATION
RATE*

2020
712 million
65%
2020 116%

*Excluding M2M

Accelerating Mobile broadband By 2020, there will be

moves to mobile
463m
connections to increase from
50% of total in 2016 to
broadband
networks and
smartphone
adoption
69% by 2020
smartphones – growth of
167 million from the end of 2016

Data growth Operator total revenues

driving
revenues
and operator
2016
$69 billion
1.8% CAGR 2016–20
investments
2020
$74 billion
Operator CAPEX of up to $50 billion for the period 2017–20
 Mobile DIGITAL INCLUSION
Delivering digital inclusion to the still

contributing unconnected populations.

MOBILE INTERNET PENETRATION

to economic 38% 2016 2020 48%

and social FINANCIAL INCLUSION
Delivering financial inclusion to the unbanked
development populations. As of December 2016 there were

across the 24 live mobile money

services in 9 countries
region INNOVATION
Delivering innovative new services and apps.
Number of M2M connections to reach

31 million by 2020

Mobile
industry
contribution
2016 $165bn 4.2%
GDP

to GDP 2020
$194bn 4.3%
GDP

Public funding Employment

Mobile ecosystem contribution
to public funding (before regulatory
and spectrum fees)

2016 $19.9bn Jobs directly supported

by the mobile ecosystem

2020 $20.5bn 2016

493,000
2020 543,000

Plus an additional 630,000

indirect jobs supported in 2020
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

8 Industry overview
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

1
Industry
overview

Industry overview 9
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

1.1
Overall growth slowing but diverging trends
across region
By mid-2017, there were 365 million unique MENA during the course of 2015. As a result, MENA
subscribers1 across the MENA region, accounting for has fallen behind Asia Pacific to become the second
63% of the population. Despite subscriber growth least penetrated region in the world, ahead of Sub-
of 4% on average annually over the last four years, Saharan Africa (43%) but behind the global average
penetration growth continues to trail the global of 67%.
average. Global subscriber penetration overtook

Figure 1 Source: GSMA Intelligence

Unique subscribers in MENA

600 72%
71%
70%
68%
500 65% 65% 65%
63% 63% 64% 64%
61% 62%
400

371 381 390 399

300
337 349 360

200

100

0
2014 2015 2016 2017 2018 2019 2020

Unique subscribers (million) Penetration (% population) Global average

1. Unique users who have subscribed to mobile services at the end of the period, excluding M2M. Subscribers differ from connections such that a unique
user can have multiple connections.

10 Industry overview
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

The regional penetration figure masks significant mobile countries in the world. By contrast, North
variations at the country level in terms of mobile Africa3 has an average subscriber penetration rate of
market maturity. In the GCC States2, 76% of the 67%, and across the Other Arab States4, penetration
population on average are mobile subscribers, and stands at 46%. In fact, the latter sub-region is home
three of these markets (Bahrain, Kuwait and the to three markets where less than a third of the
UAE) have a subscriber penetration rate of 90% or population subscribe to mobile services (Comoros,
above, placing them among the most penetrated Djibouti and Somalia).

Figure 2 Source: GSMA Intelligence

MENA subscriber penetration by sub-region, Q2 2017

78% 76%
68% 67% 63% 67% Global average

63% MENA average

46%

Iran GCC States Israel North Africa Turkey Other Arab States

2. GCC States: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE
3. North Africa: Algeria, Egypt, Libya, Mauritania, Morocco and Tunisia
4. Other Arab States: Comoros, Djibouti, Iraq, Jordan, Lebanon, Palestine, Somalia, Sudan, Syria and Yemen

Industry overview 11
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

Although subscriber penetration is below the global the SIM ratio (SIMs per unique subscriber) stands at
average, multi-SIM ownership in many countries over two, leading to a connections penetration rate
– particularly the GCC States – translates into a of more than 200%. However, other markets, such
relatively high connections5 penetration rate: 112% as Comoros, Djibouti and Somalia, have much lower
on average across MENA in Q2 2017, compared to SIM ratios of less than 1.4, resulting in a connections
103% globally. In Bahrain and the UAE for example, penetration rate close to or below 50%.

Figure 3 Source: GSMA Intelligence

MENA penetration by country, Q2 2017

250%

200%

150%

100%

50%

0%
Djibouti

Somalia

Comoros

Yemen

Israel

Morocco
Sudan

Syria

Lebanon

Palestine

Iraq

Egypt

Turkey

Mauritania

Oman

Saudi Arabia

Jordan

Algeria

Iran

Tunisia

Libya

Qatar

Kuwait

Bahrain

UAE

Subscriber penetration Connections penetration

5. Unique SIM cards (or phone numbers, where SIM cards are not used) that have been registered on the mobile network at the
end of the period. Connections differ from subscribers such that a unique subscriber can have multiple connections.

12 Industry overview
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

One reason behind the relatively low levels of • unstable political and economic conditions in
penetration on average in MENA is the high some markets showing little signs of improvement
proportion of young people: just under a third of the (such as in Iraq, Libya, Somalia, Syria and Yemen).
region’s population is under 14 years of age, which is
With a CAGR of 2.6% between 2016 and 2020, the
the second highest proportion globally (behind Sub-
region will grow faster than developed regions such
Saharan Africa at 43% but ahead of Latin America
as Europe and North America, but slower than the
and Asia Pacific at 25% and 24% respectively).6
global average of 3.5% and the developing world in
There are, however, additional factors that will cause
general. The region will therefore fall further behind
subscriber growth to continue to slow over the next
in terms of subscriber penetration, reaching 65% by
four years:
the end of 2020, compared to a global average of
• declining potential of further subscriber growth 72%.
in already highly penetrated markets (such as the
Three of the largest markets in the region – Iran,
GCC States)
Egypt and Turkey – accounted for just under half of
• the challenge of growing penetration in the the regional subscribers in mid-2017. Those same
often lower income and rural-based groups in three markets, with the addition of Iraq and Sudan,
less developed markets (such as the Other Arab will contribute 65% of the additional 34 million
States and countries across North Africa) people that will be connected by mobile services
across the MENA region by 2020.

6. World Bank

Industry overview 13
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

1.2
Migration to mobile broadband continuing
4G growing and 5G coming soon
Subscribers in MENA are increasingly migrating to Once again there is diversity across the region: in
mobile broadband services, with mobile playing a Israel and Kuwait, for example, mobile broadband
crucial role in providing internet access given the connections accounted for 92% and 87% of total
general lack of fixed broadband infrastructure in connections in Q2 2017 respectively, and will
the region. By the end of 2016, mobile broadband account for more than 95% by 2020. At the other
connections reached parity with 2G, and by the end of the scale, only 8% of connections in Somalia
end of 2017 3G will become the dominant mobile were mobile broadband in Q2 2017, and Palestine
technology. has yet to launch 3G networks.

Palestine to finally get 3G…but when?

As of mid-2017, the only mobile services available in Palestine are based on 2G technology. This
is despite an agreement reached in November 2015 between Israel and the Palestinian Ministry of
Telecommunications and Information Technology (MTIT) to allow the operation of 3G infrastructure
in the West Bank through the provision of 20 MHz of 3G frequencies, half of which is to be shared.
The deal was touted as a major step forward for the Palestinian telecoms sector and an example of
Israeli-Palestinian cooperation, which would inject hundreds of millions of dollars into the Palestinian
economy, but it is yet to materialise.
Negotiations are ongoing but, aside from continuing political issues, challenges have arisen regarding
the management of the 10 MHz of shared spectrum, particularly in bordering towns such as Kfar
Saba (in Israel) and Qalqilya (in the West Bank) where overlap could cause problems.

Growth in mobile broadband connections over the than the global average of 11.2%. By 2020, mobile
next five years will be relatively rapid, with a CAGR broadband will account for just under 70% of total
of 11.4% between 2016 and 2020, slightly higher connections.

14 Industry overview
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

Figure 4 Source: GSMA Intelligence

Technology migration in MENA

Percentage of connections

100%
1% 3% 9% 10%
14%
90% 18% 21%
28%
80% 37%

70% 41%
45%
47%
60% 48%
48%
50%

40%
71%
30% 60%
50%
45% 39%
20%
35% 31%
10%

0%
2014 2015 2016 2017 2018 2019 2020

2G 3G 4G

Expansion of 3G coverage throughout the region Yemen) without a 4G network, largely due to delays
is helping drive the uptake of mobile broadband in spectrum allocation. However, Egypt will be
services: population coverage increased from launching nationwide 4G services imminently after
around 60% in 2013 to just over 80% by Q2 2017. mobile operators were finally awarded licences
However, difficult geographic and socioeconomic in October 2016, and Djibouti aims to roll out
conditions have limited coverage expansion in commercial LTE services in the next few years.
some countries, particularly the expansive, desert-
Delays in service launches, coupled with slow rollout
dominated countries such as Sudan and Mauritania
across most of North Africa, political instability
where 3G coverage remains below 50%.
and potential issues around affordability mean 4G
The relatively slow uptake of 4G (8% of connections will still only account for just over 20% of region-
in Q2 2017 versus 28% globally) reflects the wide connections by 2020, well below the global
comparatively late arrival of 4G networks in the average of 44%. It should be noted that there may
region: the first live LTE networks were launched by be a potential upturn to these forecasts as more
Zain Saudi Arabia, Etisalat UAE and Viva Kuwait in networks are launched and if governments and
late 2011. A total of 51 LTE networks have launched mobile operators can overcome some of the barriers
in 19 countries since, but there are still six countries to future growth.
(Djibouti, Egypt, Mauritania, Palestine, Syria and

Industry overview 15
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

The rollout of mobile broadband networks across (Turkcell, Vodafone and Turk Telekom) securing
the region has led to a sharp increase in capex over licences across a range of frequencies, including
the last few years, reaching a peak of $16.1 billion in the 800 MHz band. There was a slight decline in
in 2015 (24% of recurring revenues). Much of this 2016, despite the $1.1 billion spent on 4G licences in
was due to the 4G spectrum auction in Turkey in Egypt in 2016. With no other auctions planned in
August 2015, which raised a total of $3.94 billion, the region, capex will plateau from 2017 onwards,
with the country’s three incumbent operators holding at around 17% of total revenue out to 2020.

Saudi Arabia first in MENA to auction 700 MHz spectrum

In July 2017, Saudi Arabia’s first mobile spectrum auction resulted in the allocation of 700 MHz and
1800 MHz spectrum – the first time the 700 MHz band has been allocated in MENA – raising SAR5.8
billion ($1.6 billion). All three existing Saudi mobile operators (STC, Mobily and Zain), along with new
entrant GO Telecom, participated in the auction; all four acquired 1800 MHz spectrum, while only STC
and GO Telecom invested in the 700 MHz band.
The release of the new 700 MHz band (part of the second wave of Digital Dividend allocations) and
an additional solid block of spectrum in the 1800 MHz band will contribute to deployment of high-
speed mobile broadband services in the country as part of national transformation plans for 2020–
2030. As of mid-2017, 4G connections reached 21% of total connections in Saudi Arabia – a figure
forecast to increase to 41% by the end of 2020.

Figure 5 Source: GSMA Intelligence

Capex in MENA

18

24%
16

21%
14

17% 17% 18% 17%

12 17%
10

0
2014 2015 2016 2017 2018 2019 2020

Capex ($ billion) Capex/revenue (percentage)

16 Industry overview
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

Looking further ahead, markets in MENA, These early 5G networks will be based on 3GPP
particularly some of the GCC States, will be among Release 15 and will be deployed in dense urban
the first countries globally to launch commercial areas as mobile operators look to offer increased
5G networks. With high or rapidly growing levels performance and supplement existing mobile
of 4G adoption and data consumption, supportive broadband capacity. 5G’s next phase, based on
governments and ambitious launch targets, 3GPP Release 16, will bring further enhancements
operators in these countries are challenging North to mobile data, and the rest of the commercial
American counterparts such as Verizon and Asian requirements including massive IoT and critical
operators KT, NTT DoCoMo and China Mobile in communication services.
leading 5G development.
In the early years following the initial launches,
The following look set to host the first commercial operators in 12 other countries across MENA are
5G network deployments in the region: expected to deploy 5G services. Rollout will likely be
at a similar rate to the deployment of 4G, covering
• UAE operator Etisalat conducted the first
around 30% of the region’s population by 2025.
live 5G trial in May 2017, with plans to launch
Adoption will scale rapidly, as device vendors see
commercially in 2019. The trial, using 800 MHz of
the technology as a means to differentiate handsets,
spectrum in the 15 GHz band, demonstrated 5G
while the fact that average selling prices (ASPs)
capabilities in a real-world environment over a live
for smartphones have declined since the launch of
network, including tests on speed, latency and
4G means affordability will prove less of a barrier
beam steering.
to ownership. 5G connections (excluding IoT) are
• In May 2017, Ooredoo announced it had added its anticipated to surpass 50 million in MENA by 2025.
10th 5G base station in Qatar, and will continue
to test important 5G equipment, software
and spectrum requirements leading up to the
standardisation of 5G technology towards the
end of 2017. This will be followed by a commercial
launch in 2020.

Figure 6 Source: GSMA Intelligence

5G take-up in MENA

29%

25% 53

20%

15% 32

12%

15

1% 5
0%
1
0 0
2019 2020 2021 2022 2023 2024 2025

5G connections (million) 5G coverage (percentage of population)

Industry overview 17
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

1.3
Growing adoption of smartphones and other
advanced services

The growth of mobile broadband subscribers levels of smartphone adoption: smartphones

across MENA largely reflects the rising smartphone accounted for less than 25% of connections in
adoption rate: the number of smartphone Comoros, Somalia and Yemen in Q2 2017. These
connections has doubled in three years to reach markets will, though, see rapid growth over the
319 million in Q2 2017, accounting for just under next few years: smartphone adoption will more
50% of total connections in the region. Although than double by 2020 to reach 49%, 45% and 48%
this is below the global average adoption rate of respectively. Declining device prices will drive much
53%, MENA will see the second fastest growth of this growth. Smartphone ASPs dropped to $165
in smartphone adoption of any region, adding a in 2016 across MENA, down from $200 in 2014 and
further 144 million smartphone connections by over $260 in 2012,7 with more devices available in
2020. This will bring smartphone adoption to 65%, the sub-$100 range. Chinese manufacturer Xiaomi,
broadly in line with the global average. for example, sells the Redmi Note in the UAE for
AED299 ($81), and the Redmi 4A in Saudi Arabia for
However, some markets exhibit particularly low
around SAR346 ($92).

7. Source: Strategy Analytics

18 Industry overview
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

As consumers migrate to mobile broadband and This use of additional services is driving strong
smartphone adoption grows, use of data services growth in mobile data traffic across the region.
is also increasing. An increasing number of people Ericsson forecasts that mobile data traffic will grow
across MENA are using IP messaging (see Section 14-fold over the next six years in MENA, reaching
2.2.1) and using their mobile phones to watch online 5.2 EB per month by 2022. This represents an
video. Across the developed markets surveyed8, average annual growth rate of 56%, higher than the
between two thirds and three quarters of mobile global average of 42%. The amount of data used
phone owners claim to watch online video on monthly by each unique subscriber will increase
their phones at least once per week. Even in the substantially from an average of 1 GB in 2016 to
developing markets9, between 44% and 60% claim almost 12 GB in 2022.
to watch video at least once per month.10

8. Israel, Qatar and Saudi Arabia

9. Algeria, Egypt and Morocco
10. Source: GSMA Intelligence Consumer Survey 2016

Figure 7 Source: Ericsson, GSMA Intelligence

Mobile data in MENA to grow rapidly

Mobile data traffic (GB per subscriber per month)

11.6

1.0

2016 12x 2022

Industry overview 19
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

GCC States SUBSCRIBERS TECHNOLOGY MIX

Mobile internet Voice only Non-subscriber 2G 3G 4G

2020 23% 2020 41%

11%
24% 21%

KUWAIT
4%
BAHRAIN
QATAR 7% 57% 22%
SAUDI
ARABIA
UAE
OMAN
Q2 2017 Q2 2017
73%
69%
DJIBOUTI

48%

SMARTPHONE
ADOPTION
Q2 2017 72% 2020 78%

North Africa SUBSCRIBERS TECHNOLOGY MIX

Mobile internet Voice only Non-subscriber 2G 3G 4G

2020 31% 2020 13%

33% 60% 3%
MOROCCO
TUNISIA
50%
ALGERIA LIBYA
EGYPT

MAURITANIA

Q2 2017 Q2 2017
27%
28%
17%
40%
47%

52%

SMARTPHONE
ADOPTION
Q2 2017 41% 2020 64%

Other Arab States SUBSCRIBERS TECHNOLOGY MIX

Mobile internet Voice only Non-subscriber 2G 3G 4G

LEBANON
SYRIA
2020 51% 2020 11%
PALESTINE IRAQ

JORDAN
38%
54% 31% 3%

SUDAN YEMEN

DJIBOUTI
Q2 2017 24% Q2 2017
SOMALIA
31% 66%

22%
COMOROS

18% 51%

SMARTPHONE
ADOPTION
Q2 2017 36% 2020 56%

20 Industry overview
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

Iran SUBSCRIBERS TECHNOLOGY MIX

Mobile internet Voice only Non-subscriber 2G 3G 4G

2020 21% 2020 18%

22% 39% 6%
IRAN

47%
35%
45%
Q2 2017 Q2 2017
33%
DJIBOUTI
34%
54%

44%

SMARTPHONE
ADOPTION
Q2 2017 42% 2020 59%

Israel SUBSCRIBERS TECHNOLOGY MIX

Mobile internet Voice only Non-subscriber 2G 3G 4G

2020 31% 2020 47% 3%

32% 14%
8%
77%

Q2 2017 Q2 2017
ISRAEL
3%
0%
65%
69%

50%

SMARTPHONE
ADOPTION
Q2 2017 78% 2020 81%
DJIBOUTI

Turkey SUBSCRIBERS TECHNOLOGY MIX

Mobile internet Voice only Non-subscriber 2G 3G 4G

2020 34% 2020 42%

37% 19%

34%
TURKEY Q2 2017 Q2 2017

9% 32%
7%
54% 48%
59% 26%

DJIBOUTI

SMARTPHONE
ADOPTION
Q2 2017 71% 2020 74%

Industry overview 21
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

1.4
Revenue returning to growth
2015 saw a return to revenue growth in MENA, Looking forward, revenue is likely to grow as more
reversing the downward trend brought on by countries roll out or expand 4G networks and
slowing subscriber growth, increased competition mobile operators continue to monetise the strong
and a general slowdown due to political, economic growth in data traffic (for example, by offering a
and social conditions. Revenues increased further range of data bundles). However, the growth will be
in 2016, growing by 1.6% annually, largely driven by modest due to further slowing of subscriber growth,
the rising uptake of 4G services across the region. ongoing political and socioeconomic instability,
For example, Vodafone Turkey and Turk Telekom increasing competition and the cannibalisation of
reported that recurring revenue increased annually traditional revenues by IP messaging platforms.
by 20% and 16% respectively following the launch With growth forecast at a CAGR of 1.8% per annum
of 4G services; and Irancell’s recurring revenue grew between 2016 and 2020, mobile operators are
by 22% over the same period due to expansion of its under pressure to diversify their revenue streams,
LTE network. implement new services and find effective ways to
monetise the growth in data traffic to counteract the
revenue squeeze.

22 Industry overview
 THE MOBILE ECONOMY MIDDLE EAST AND NORTH AFRICA 2017

Figure 8 Source: GSMA Intelligence

Revenue trends in MENA

($ billion)

71 73 74
67 68 69 70
30% 31%
28% 28% 29%
24%

19%

2014 2015 2016 2017 2018 2019 2020

Total revenue Data as a percentage of total revenue

Helping to prop up total revenue in the region, data recurring revenues, up from 24% in 2015 and 13%
revenue is growing strongly: Djezzy Algeria and in 2012. This proportion is considerably more for
Vodafone Turkey reported 74% and 64% rises in data mobile operators in the more advanced markets;
revenues respectively in 2016 following the launch of 70%, 55% and 52% in Q1 2017 for Turkcell, Ooredoo
4G services; and Irancell (MTN) data revenue grew Oman and Zain Bahrain respectively (up from 29%,
by 69% annually in 2016 due to modernisation of 49% and 38% in Q1 2016). By 2020, mobile data
existing 3G sites and expansion of its LTE network. revenue will have grown by an annual average of
4.3% to $23 billion, accounting for 31% of recurring
On average across the region, data revenues grew
revenues.
by 15% in 2016 to reach $19 billion and 28% of

Industry overview 23
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Mobile contributing to growth, innovation

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2
Mobile
contributing
to growth,
innovation
and social
development

Mobile contributing to growth, innovation

and social development
25
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2.1
Delivering growth and jobs
The mobile ecosystem consists of mobile network economy, including employee compensation,
operators, infrastructure service providers, retailers business operating surplus and taxes.
and distributors of mobile products and services,
In 2016, the total value added generated by the
handset manufacturers and mobile content,
mobile ecosystem was around $53 billion (or 1.4%
application and service providers. The direct
of GDP), with network operators accounting for the
economic contribution to GDP of these firms is
vast majority of this.
estimated by measuring their value added to the

Figure 9 Source: GSMA Intelligence

Direct GDP contribution of the mobile ecosystem

($ billion, % 2016 GDP)

1.15%

45

0.09%
0.08% 0.01%
0.02%

3 4
0 1
Infrastructure Mobile Device Distributors and Content, applications
providers operators manufacturing retailers and other services

Note totals may not add up due to rounding.

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In addition to their direct economic contribution, agricultural sector). The impact of mobile internet
firms in the mobile ecosystem purchase inputs is particularly important in countries where a
from their providers in the supply chain. For significant proportion of the population can only
example, handset manufacturers purchase inputs access internet via a mobile platform; for example,
from microchip providers, and content providers in Egypt and Iraq.
require services from the IT sector. Furthermore,
• The third is the next generation of mobile services,
some of the profits and earnings generated by the
in particular M2M and the Internet of Things,
ecosystem are spent on other goods and services,
which will allow firms to improve equipment
stimulating economic activity in those sectors.
maintenance and operations (e.g. using sensors
We estimate that in 2016, this additional economic to monitor the health of machinery), optimise
activity generated a further $14 billion in value add inventory (e.g. tracking real-time inventory so
(or 0.3% of GDP) in the region. it can be replenished when needed) and save
on energy costs (e.g. using intelligent energy
The use of mobile technology also drives
management systems to reduce unnecessary
improvements in productivity and efficiency for
energy use). It also has the potential to improve
workers and firms. There are three ways in which
public services such as health and utilities. Given
this takes effect:
that such services are still in the early stages of
• The first is the use of basic mobile voice and development, this impact was limited in 2016 but
text services, which allows workers and firms to it will grow in the coming years, particularly in
communicate more efficiently and effectively (for countries that are likely to be early adopters of
example, by reducing unproductive travel time). the technology, such as Kuwait and Qatar.
There is significant variation across MENA in
We estimate these productivity impacts were worth
mobile connections penetration, ranging from less
around $98 billion in 2016 (or 2.5% of GDP).
than 70% in Yemen and Sudan to almost 200% in
Qatar and the UAE. Overall, taking into account the direct, indirect and
productivity impacts, in 2016 the mobile industry
• The second is the use of 3G and 4G technology,
made a total contribution of $165 billion to MENA
which allows workers and firms to use mobile
economies in value added terms, equivalent to 4.2%
data and internet services (for example, by
of the region’s total GDP.
improving access to market information in the

Figure 10 Source: GSMA Intelligence

Total (direct, indirect and productivity) contribution to GDP

($ billion, % 2016 GDP)

98 165

2.5%

14 4.2%

53 0.3%

1.4%

DIRECT INDIRECT PRODUCTIVITY TOTAL IMPACT

Note totals may not add up due to rounding.

Mobile contributing to growth, innovation

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Employment
In 2016 mobile operators and the ecosystem generated by the mobile sector. Furthermore, the
provided direct employment to approximately 0.5 wages, public funding contributions and profits paid
million people in the region. In addition to this, by the industry are spent in other sectors, which
economic activity in the ecosystem generates jobs in provide additional jobs.
other sectors. Firms that provide goods and services
We estimate that in 2016, around 0.6 million jobs
as production inputs for the mobile ecosystem
were indirectly supported in this way, bringing the
(for example, microchips or transport services) will
total impact (both direct and indirect) of the mobile
employ more individuals as a result of the demand
industry to 1.1 million jobs.

Figure 11 Source: GSMA Intelligence

Employment impact
Jobs (millions)

0.64 1.13

0.28 0.02 0.49

0.13 0.01
0.05
INFRASTRUCTURE OPERATORS DEVICE DISTRIBUTION CONTENT, APPS DIRECT INDIRECT TOTAL
PROVIDERS MANUFACTURING AND SERVICES

Note totals may not add up due to rounding.

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Public funding contribution

The mobile ecosystem also makes a significant sector-specific consumer taxes (such as mobile-
contribution to the funding of public sector activity specific excise taxes on usage and/or handsets or
in the region through taxation. For most countries, higher sector-specific VAT rates). We estimate that
this includes general forms of taxation (such as the ecosystem made a tax contribution to the public
standard VAT, corporation tax, custom duties, finances of the region’s governments of $20 billion
income tax and social security contributions) and in 2016.

Figure 12 Source: GSMA Intelligence

Contribution to public funding by the mobile industry

(2016 $ billion)

3 20
4
5
9

TAXES ON MOBILE TAXES ON HANDSETS TAXES ON PROFITS EMPLOYEE INCOME AND TOTAL
SERVICES CONSUMPTION SOCIAL SECURITY

Note totals may not add up due to rounding.

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Outlook and trends for the period 2016–2020

Going forward, we expect the economic (4.3% of GDP). The majority of this increase will
contribution of the mobile industry in MENA be driven by improved productivity, particularly
will continue to increase in relative and absolute from the increasing adoption of mobile internet
terms. In value-added terms, we estimate that services.
the ecosystem will generate $194 billion by 2020

Figure 13 Source: GSMA Intelligence

Outlook to 2020
($ billion, % of GDP)

250

4.3% 4.3% 4.3%

4.2%
4.2%
200

150

111 117 123

98 104
100

14 14 14 14 14
50

53 55 56 56 56
0
2016 2017 2018 2019 2020

Ecosystem Indirect Productivity % of GDP

Note totals may not add up due to rounding.

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2.2
The platform for innovation across MENA
2.2.1
Engagement in mobile services
The Global Mobile Engagement Index (GMEI) • usage score – the average number of mobile use
measures the level of engagement of smartphone cases in which adult phone owners engage
and non-smartphone users across a range of use
• frequency score – how often they engage in the
cases and services. The higher the score, the more
use case on average.
likely consumers are to regularly engage in using
mobile services. The Index has been built based on Consumers are divided into four segments based on
inputs from the GSMA Intelligence annual Consumer their mobile engagement levels: Aficionados (early
Survey, which covers 56 countries worldwide – adopters), Pragmatists (early majority), Networkers
representing 80% of the global population. It is (late majority) and Talkers (laggards).11
based on the computation of two scores for each
country surveyed:

Stark contrast in user engagement across MENA

MENA is a region of contrasts in terms of the level Korea), while Egypt sits towards the bottom of the
of mobile user engagement across countries and global rankings. Overall, the average GMEI score in
by developed and developing economies. Qatar has developed MENA markets12 is almost three times
the highest level of user engagement globally of the greater than those in developing markets.13
56 surveyed countries (joint first place with South

Table 1 Source: GSMA Intelligence

GMEI results for MENA countries

(ranking of 56 countries surveyed)

Rank Country Engagement score

1 Qatar 5.0

4 Saudi Arabia 4.6

13 Israel 4.2

37 Algeria 1.9

39 Morocco 1.7 Note: score accounts for

smartphone and non-smartphone
users and is weighted based on
49 Egypt 1.1 unique subscriber penetration

11. For more information, see GMEI 2017: Global Mobile Engagement Index
12. Developed MENA markets: Israel, Qatar and Saudi Arabia
13. Developing MENA markets: Algeria, Egypt and Morocco

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Part of this difference can be explained by varying smartphone adoption is not the whole story. Even
levels of smartphone adoption: smartphone user among smartphone owners there are differences
engagement is almost twice the level for non- in the types of mobile services people in the
smartphone users in MENA, and smartphone region typically engage in, with users in developed
adoption in developed MENA markets is as much markets using all categories of services much more
as double that of the developing markets. However, frequently.

Figure 14 Source: GSMA Intelligence

Users in developed MENA markets more frequently engage in

a variety of use cases

Traditional
communications

Financial 4.1 Mobile internet

services 3.8 communications

4.0

3.2

Digital 2.1
Social
commerce 4.4 networking
3.8
1.3

2.1
1.6

1.0 2.0 3.0 4.0 5.0

2.7
2.9
3.3
4.2
Entertainment 1.9 Internet
2.3
2.7

3.4
3.0
3.2

Navigation Lifestyle

Developed MENA FREQUENCY SCORE

1 (never)
Apps
Developing MENA
5 (every day)

Note: includes smartphone and non-smartphone users

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For example, more and more people across MENA frequently than SMS.14 Saudi Arabia saw a decline
are using IP messaging apps such as WhatsApp and in people using IP messaging more frequently than
Facebook Messenger. In Saudi Arabia, Qatar and SMS, largely due to services such as Facebook
Israel, more than four-fifths of mobile phone owners Messenger, WhatsApp, Line and Viber being
use IP messaging apps more frequently than SMS, intermittently banned in recent years; nevertheless,
and in Algeria and Morocco, use of IP messaging only 8% of mobile phone owners in Saudi Arabia do
is growing rapidly, with more than 55% of mobile not use IP messaging at all.
phone owners now using IP messaging apps more

Figure 15 Source: GSMA Intelligence Consumer Survey 2016

IP messaging use in MENA

81+19+M 80+20+M 80+20+M

Percentage of respondents who use IP messaging more frequently than SMS

Saudi Arabia Qatar Israel

81% -6
80% +1
80% +3

59+41+M 55+45+M 43+57+M

Algeria

59% +25

Change from 2015 (percentage points)

Morocco

55% +10
Egypt

43% +6

A key factor holding back the level of engagement Aficionados – who show the highest engagement
across developing markets is the limited availability across all use cases and are very tech-savvy – or
of mobile broadband networks, particularly Pragmatists – who engage frequently with most
4G: across MENA developing countries, mobile use cases, but primarily those that are free. These
broadband accounted for fewer than half of total segments have a good understanding of mobile
connections on average in Q2 2017, compared to technology and engage in entertainment, digital
more than three quarters in developed countries. commerce and financial services on their phones. In
This limits what users can do on their phones, even if developing markets meanwhile, most phone owners
they do own a smartphone. Other important factors are classified as Networkers, who mainly use their
are digital literacy and the availability of content in smartphones to explore the internet, engage in
the local language, both of which are challenges social networks and communicate via IP messaging
across the developing markets (see Section 2.3.1). apps. There is also a larger proportion of Talkers,
who only use their smartphones for traditional
In the developed countries, the vast majority
communication (voice and text).
of smartphone owners are classified as either

14. Source: GSMA Intelligence Consumer Survey 2016

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Figure 16 Source: GSMA Intelligence

Smartphone owners by segment

7% 5% 12%
24%
17% 17%

42%
44% 44% 36%

36%
31%
33% 34%
8% 10%
2016 2030 2016 2030

Developed MENA Developing MENA

Aficionados Pragmatists Networkers Talkers

Over the next decade or so, the gap in internet Pragmatists with 39% and Networkers with 35% (up
penetration and smartphone adoption between from 36% and 29% in 2016 respectively). However,
developed and developing markets will narrow. compared to the developed markets, there will still
Concomitantly, in these countries the proportion be a relatively small proportion of Aficionados and
of smartphone owners who engage in additional Pragmatists in the developing markets, indicating
services such as internet browsing, social that more work will need to be done in terms of
networking and IP communications will rise. This affordability, digital literacy and the regionalisation
will drive overall engagement up across the region of online content to get more people engaged in
as a whole. By 2030, the largest segments will be additional services.

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2.2.2
Areas of leadership

Smart cities

The Gulf region has one of the highest urbanisation rates in the world, home to cities such as Doha, Dubai
and Riyadh that are increasingly congested, their transport and energy networks under ever increasing
pressure. Additionally, economic/political insecurity and conflicts are affecting a growing number of
countries across the region. Consequently, governments face pressing and complex challenges in the battle
to improve the living standards of their citizens, such as reducing pollution and mitigating the consequences
of climate change, and more efficiently managing economic resources.
City managers and local government decision makers can address these challenges and generate significant
social and economic benefits for their citizens and businesses through well-conceived, designed and
implemented smart city services. For example, lives can be saved with IoT monitoring technology enabling
faster emergency services response; fuel costs and carbon emissions can be reduced through efficient smart
transport networks; and smart metering and smart building plans can generate significant energy savings of
hundreds of GWH in large cities across the region.

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Examples of such developments include the Economy, Smart Living, Smart Governance,
following: Smart Environment, Smart People and Smart
Mobility – the ultimate goal is to make Dubai the
• Saudi Arabia: after almost a decade and
‘happiest city on earth’. One part of the project,
investment of more than $10 billion, the King
the Dubai Silicon Oasis Authority (DSOA), hopes
Abdullah Financial District in Riyadh hopes to
to attract new business through provision of
open its first phase for business in 2017. Envisaged
state-of-the-art smart city facilities, electric cars,
as a pioneering financial hub, the city boasts
remote controlled digital signage, free Wi-Fi
energy-efficient glass skyscrapers and aims to
and intelligent controls of water supply and
offer a futuristic smart city experience, extending
consumption.
across mass transit, energy supply and more.
In March 2017, the Smart Dubai Office (SDO)
Additionally, in April 2017, the Ministry of Municipal announced plans to implement blockchain
and Rural Affairs launched the “application of technology into services across the city, aiming
smart city concepts” initiative as a part of Saudi to make Dubai the first blockchain-powered
Arabia’s National Transformation Program 2020 government in the world by 2020. And in May
and Vision 2030, with the goal to enhance urban 2017, the SDO launched ‘Dubai Now’, a single
development, sustainability and competitiveness, platform for accessing more than 50 smart
as well as boost citizen satisfaction. The plan also services from the government and private sector.
aims to improve city management efficiency,
minimise negative environmental impact, attract The platform targets the public, visitors and
local and foreign investment, and create job the business sector, and allows users to, among
opportunities. The initiative, in partnership with other services, pay traffic violations, water and
the private sector, will target five cities across electricity bills, and Etisalat and Du fees; top
the country by 2020, and will bring together up Salik and Nol cards; access Dubai Customs
various ‘smart’ components, including buildings, accounts; and track visa applications.
drainage networks, street lighting and security, Mobile networks can support smart city
transport, utilities, communications (e.g. Wi-Fi) deployments that are secure, scalable and robust.
and emergency response systems. Mobile IoT networks are uniquely positioned to
• UAE: Smart Dubai, formally undertaken in March securely connect various sensors across cities,
2014, brings together the private sector and and can support low power wide area (LPWA)
government partners and integrates technologies technologies. These provide very low power
such as ICT and IoT into its infrastructure, aiming consumption (with battery lives in excess of 10 years
to transform its networks and services into a for some applications), very low modules costs,
more intelligent and collaborative ecosystem. By optimisation for very brief messages typical of IoT
delivering and promoting an efficient, seamless, applications, good indoor and extended outdoor
safe and impactful city experience for residents coverage, scalability, security, easy maintenance and
and visitors through its six dimensions – Smart suitable integration into unified IoT platforms.

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Digital identity

Across many industries such as entertainment, to consumers. It eliminates the ever-increasing

banking, health and e-government, services and number of passwords needed to securely maintain
processes are becoming both more digital and online identities; gives consumers control over their
more mobile. This has resulted in unprecedented data, helping them interact online with confidence;
efficiency and convenience for individuals reduces the risk of fraud for service providers when
and businesses alike. However, consumers are users access their services; and can reduce the
increasingly demanding to access these services number of abandoned online transactions. Mobile
securely, shielded by robust privacy safeguards and Connect already has around 90 million registered
strong data protection delivered by digital identity users globally, and while it has arrived only recently
capabilities. in the MENA region, some markets are experiencing
early traction, particularly in highly populated
Mobile Connect is a secure universal login solution,
areas. There have been two deployments of Mobile
and the new standard in digital authentication. It
Connect in the region to date: by Orange Morocco
uses the consumer’s unique mobile number to verify
and Turkcell. Various other operators (such as in
and grant online access anywhere the user sees the
Jordan and the UAE) are planning to launch Mobile
Mobile Connect logo, providing clear advantages
Connect services soon.

Mobile Connect in Turkey

In December 2015, Turkcell launched Mobile by 80%. As of April 2017, around half of all logins
Connect on its self-care mobile site, followed by to the Turkcell self-care portal were via Mobile
full integration into the self-care website in April Connect. By July 2017, there were 2.75 million
2016, reducing the authentication process from registered users – just under 10% of Turkcell’s
three steps to one. In addition to the self-care base.
portals, two further Turkcell applications now
In the near future, Turkcell is planning to
use the Mobile Connect solution: the corporate
integrate Mobile Connect into other Turkcell
site and the Piri travel application.
apps. It also intends to launch a higher security
To drive usage, Turkcell made Mobile Connect option with a PIN as a second authentication
the default login option in November 2016, and factor, and aims to employ Mobile Connect to
the portal was redesigned in December 2016 enable authorisation as well as authentication. It
with “Fast Login (powered by Mobile Connect)” is considering expanding the solution so it can
branding. As a result, the proportion of people be used by other operators’ subscribers via a
using Mobile Connect to access the mobile site one-time password delivered via SMS.
rose eightfold, while daily transactions increased

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2.2.3
Supporting the startup community
New and innovative digital players have often Additionally, in a virtuous circle, such collaboration
successfully capitalised on the rapid growth of the is helping scale innovative and sustainable mobile
digital ecosystem, capturing the opportunity at a services in emerging markets. By supporting
fast pace and even cannibalising some of the mobile innovators to secure the funding and direction they
operators’ value-added services. This has led mobile require to bring their products and services to scale,
operators to realise that collaboration with tech mobile operators are helping to deliver the most
start-ups is essential to their own development, impactful mobile solutions to the people and places
allowing them to: that need them most, and generate the greatest
socioeconomic impact.
• drive user acquisition and retention by enhancing
product offerings The startup community is increasingly using mobile
technology to deliver initiatives and programmes
• create new avenues of ARPU growth beyond
across the region, and the mobile industry is helping
access revenues
in three ways: funding, either directly through
• improve customer engagement and customer corporate venture capital or via innovation funds;
satisfaction by modernising touchpoints and tech hubs and accelerator programmes; and APIs.
providing more relevant services to customers
• generate cost efficiencies through digitisation of
the core telecoms business.15

Funding

Recent years have seen a significant rise in mobile virtual shopping service), Eventtus (an event
operators seeking to invest in start-ups to accelerate management platform) and Swipe’nTap (an
innovation and protect themselves from disruption. interactive marketing solution).
While most activity has focused on developed
• The GSMA Ecosystem Accelerator Innovation
markets, mobile operators in emerging markets
Fund17 aims to build collaboration between start-
have realised the potential of such investments: in
ups and mobile operators, helping operators
2015 alone, telecoms operators invested $3.2 billion
overcome challenges innovating in emerging
in tech companies in emerging markets.16
markets, and start-ups overcome challenges
• Saudi Arabia’s STC Ventures is a Dubai-based preventing them from scaling. Supported by the
operation that executes investments in the IT, UK Department for International Development,
telecoms and digital media/entertainment sectors the first round of funding resulted in support
in the region. Its portfolio includes several Middle for one start-up from the MENA region, Raye7,
Eastern technology companies including Careem, a culturally sensitive carpooling solution for
a Dubai-based rival to Uber with 10 million daily commuting in Egypt. The second round
registered users in 11 countries and a valuation of of funding, focused on supporting start-ups
more than $1 billion. operating in the sharing economy, and developing
services for micro, small and medium-sized
• Vodafone Ventures has invested in numerous
enterprises (SMEs), closed in July 2017, with
Egyptian companies, including Eshtery (a
winners to be announced later in the year.

15. Building synergies: How mobile operators and start-ups can partner for impact in emerging markets, GSMA, January 2017
16. Corporate venture capital: An opportunity for mobile operators and start-ups in emerging markets, GSMA, October 2016
17. www.gsma.com/eainnovationfund

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Tech hubs and accelerators

Tech hubs, incubators and accelerators provide accelerator programmes across five countries in
start-ups with business support and services to MENA, with Egypt, Morocco and Tunisia particular
help them scale, usually by facilitating access to hotbeds of activity.18
critical resources such as skills, funding, technology,
• For example, the Orange Developer Center in
business network and digital tools. Although the
Tunis, Tunisia is a training and collaboration space
more advanced countries such as Israel and the GCC
for start-ups in the production phase. In May 2016,
States are historically the centres of innovation in
Orange completed an upgrade to increase space
the region, countries in North Africa are becoming
and capacity, and to provide start-ups with the
much more active in this space: the GSMA has
latest equipment (including cloud services and
identified 71 active tech hubs, incubators and
virtual machines).

APIs

Application programming interfaces (APIs) are • Orange has opened several APIs across MENA,
bridges between mobile operators and start-ups including direct carrier billing in Egypt, Jordan,
that launch mobile services, allowing third parties Morocco and Tunisia; SMS in Egypt and Tunisia;
to use certain mobile network functions within their and the #303# My Store API in Egypt. Start-
applications, such as messaging, billing, location or ups already using Orange billing APIs include
mobile money to provide mobile services to their Istikana (an online video service based in Jordan)
end users. For example, a start-up can offer SMS- and STARZ Play (a SVOD service provider
based localised content to its users depending headquartered in the UAE). By the end of 2018,
on their city or area, and then charge them by Orange plans to expand the coverage of its
deducting the amount from their mobile airtime. existing API portfolio to all of its five operations in
Such a service would leverage three operator APIs the region, and release its Mobile Connect API in
simultaneously: SMS, location and direct operator Egypt and Morocco.
billing. In emerging markets, where mobile operators
are the main enablers of the digital economy,
operator APIs are a powerful channel for unlocking
creativity and giving the start-up ecosystem a
boost.

18. A few things we learned about tech hubs in Africa and Asia, GSMA, August 2016

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2.3
Addressing social challenges
2.3.1
The connectivity gap in MENA
Digital technology is evolving rapidly, leading to However, despite the steady progress, a vast digital
the emergence of new services and applications divide remains in many parts of MENA, particularly
that are transforming the way people live, work, in the developing countries: across the region, there
play and communicate. The large-scale societal are 350 million people without access to the mobile
adoption and use of digital technologies is a key internet. In order to understand the reasons behind
driver of measurable economic, social and cultural this connectivity gap, the GSMA Mobile Connectivity
value, including increased productivity, a rise in Index measures how the key enabling factors for
employment rates, improved security and greater mobile connectivity differ across markets, helping
capacity to tackle social and environmental issues. focus the efforts and resources of the mobile
industry and wider international community on the
The penetration of the mobile internet in MENA
right projects in the right markets at the right time,
has doubled over the last six years, reaching just
so progress towards universal connectivity can be as
under 40% of the population by mid-2017. By the
swift and economically sustainable as possible.19
end of the decade, an additional 67 million people
are expected to gain access to the mobile internet
across the region, bringing the total to 295 million –
48% of the population.

19. For more information see the Mobile Connectivity Index Launch Report.

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Figure 17 Source: GSMA Intelligence

The Mobile Connectivity Index in MENA

TURKEY

LEBANON

TUNISIA IRAQ IRAN

MOROCCO ISRAEL

JORDAN
KUWAIT
ALGERIA BAHRAIN
EGYPT QATAR

SAUDI UAE
ARABIA OMAN

MAURITANIA

SUDAN YEMEN

Leaders

SOUTH
Fast transitioners SUDAN

Transitioners

Emerging

Discoverers

The index is built around four key enablers of mobile • content: the availability of online content and
internet connectivity, which are critical to creating services that are accessible and relevant to the
the right conditions of supply and demand for local population.
mobile internet connectivity to flourish:
Reflecting the diversity outlined throughout this
• infrastructure: the availability of high- report, the MENA region is home to countries that
performance mobile internet network coverage sit in every cluster of the Connectivity Index: from
‘Leader’ countries Israel and Qatar, to Mauritania, a
• affordability: the availability of mobile services
‘Discover’ country that sits towards the bottom of
and devices at price points that reflect the level of
the global ranking. Of the 350 million unconnected
income across a national population
across MENA, more than 60% live in five countries
• consumer readiness: citizens with the awareness – Egypt, Iran, Iraq, Sudan and Algeria. Each of these
and skills needed to value and use the internet countries faces challenges around the four key
and a cultural environment that promotes gender enablers of mobile internet connectivity.
equality

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Table 2 Source: GSMA Intelligence

Factors behind the connectivity gap

Mobile Mobile Unconnected

Consumer
Connectivity Infrastructure Affordability Content internet population
readiness
Index penetration (m)

MENA 58 52 62 59 63 39% 350

Egypt 55 46 60 52 65 32% 64

Algeria 53 41 65 55 53 39% 25

Iran 51 40 49 70 51 33% 55

Iraq 48 42 50 44 56 16% 32

Sudan 39 32 40 40 46 30% 29

Many countries in MENA face issues around • Spectrum issues: all five countries have still not
infrastructure, and this is a key factor behind the completed the digital switchover process, and are
large connectivity gap in the region. The challenges therefore yet to allocate spectrum in the digital
differ from market to market: dividend band (700 MHz) to mobile services (as
outlined in Section 1.2, Saudi Arabia was the first
• Low 2G coverage: in the last year or so, MTN
in MENA to do so in July 2017). This band is key to
Sudan and MTN Irancell have reported 2G
bringing affordable 4G mobile broadband services
population coverage of only 55% and 86%
to all parts of MENA – from urban centres to rural
respectively, well below the 98%-plus that most
villages. These countries, as well as many others
countries exhibit.
across the region, are now at a disadvantage when
• Low 4G coverage: Egypt is yet to launch 4G it comes to supporting rapidly growing mobile
services, and all other countries have low broadband uptake and usage as well as advanced
4G coverage, especially Sudan (10% of the 4G, and in future 5G, services.
population), Algeria (24%) and Iraq (25%). The
regional average is 37%.

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Affordability is generally less of an issue in these Availability of content is also an issue, though not
countries compared to the regional average, given as significant in MENA as it is in other regions such
that monthly costs are relatively low (at less than as Asia Pacific or Sub-Saharan Africa. English is
$5 per month, Algeria Egypt, Iran and Sudan spoken widely throughout the region, so availability
have among the lowest ARPU levels in the world). of apps in local languages is not a major problem.
However, due to the wide income distribution The exception is Iran where, although Persian is the
and high poverty rate in some of these countries, official language, it is only spoken by around half
particularly in Iraq and Sudan, affordability is a the population; the remainder is divided between
critical issue for those at the bottom of the pyramid, dozens of other languages. Aside from language,
for whom mobile ownership can account for a there are other concerns – particularly in Algeria and
prohibitive proportion of their average income. In Sudan – around content creation (both apps and
addition, high sector-specific taxation in some of websites) and a lack of e-government services.
these markets (for example in Algeria and Egypt20)
All the countries of the MENA region have seen
can reduce the affordability of services, potentially
an increase in their Connectivity Index score in
contributing to the poorer sectors of the population
the last year, primarily due to improvements in
remaining unconnected.
infrastructure (a number of countries launched
In terms of consumer readiness, without 4G services in 2016, while others saw significant
the necessary skills and supporting cultural gains in 4G coverage and network quality). Further,
environment, individuals will not understand how eight of the 19 countries included in the Index have
to use the mobile internet or appreciate how it can progressed in terms of their cluster grouping since
benefit them. Individuals, especially women, might 2014. The country that has improved the most is
also find themselves prevented from accessing Iran, increasing by 8.6 percentage points in the last
the mobile internet. It is therefore important two years and progressing from an ‘Emerging’ to a
to consider the skills and education levels of a ‘Transitioner’ country. This was driven by significant
country, as well as the degree of gender equality developments in enablers associated with
in education, finance and in the labour market: infrastructure (expansion of 3G and 4G coverage
these factors influence the ‘Consumer readiness’ as well as improvements in latency) and content
indicator of the Mobile Connectivity Index. Iraq and (gains in social media engagement and availability
Sudan have particular challenges in this regard: of content in local languages).
the literacy rate is below 76%, only 46% and
16% of the population respectively have at least
some secondary education, and less than half of
adults participate in the labour market. Further,
gender inequality is a particular issue in these
countries: the male-to-female ratio of labour force
participation is more than 3:1, and only 36% and 14%
of women respectively have some sort of secondary
education.21

20. Delivering mobile connectivity in MENA: A review of mobile sector taxation and licence extension, GSMA, May 2017
21. World Bank

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2.3.2
Addressing the UN Sustainable Development Goals
The GSMA and mobile operators are united in already playing a key role in tackling various social
support for helping achieve the UN’s Sustainable and economic challenges around poverty, health,
Development Goals (SDGs) in MENA. With its education, gender equality, employment, safer
reach of 5 billion people across the globe, mobile is cities, climate change and identity.

No poverty
End poverty in all its forms everywhere.
MOBILE OPERATOR INITIATIVES

Over 60% of the population is financially excluded in MENA – a higher proportion

than all regions except for Sub-Saharan Africa, where two thirds of the population
are unbanked. Aside from Iran, in all developing countries in the region more than
half of the population are excluded from financial services.
By providing the poor with the financial services they need to make investments
and manage unexpected expenses, the mobile money industry is helping to
eliminate extreme poverty. The industry is also contributing to job creation,
entrepreneurship, and the growth and stability of the financial system in many
markets, all of which help to reduce poverty.

CASE STUDY

Mobile money
Mobile money services were first launched in the region in Somalia in 2009. There are now 24
live services in nine markets. In 2016, mobile money was introduced in two new markets: Iraq and
Jordan.
Zain Cash was launched in Iraq in February 2016 by Iraq Wallet, an authorised company from
the Central Bank of Iraq (CBI). Through Zain Cash, customers can have a mobile money account
linked to their SIM card, enabling them to make financial transactions easily and at any time.
In early 2016, Jordan became the first country in the region to implement interoperability of
mobile money services after the successful launches of Mahfazti in January and Zain Cash in
March. Both services are connected to JoMoPay, a central switch owned by the Central Bank of
Jordan which enables cross-network transfers between the services as well as interoperability
with the country’s broader payment infrastructure.

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Education
Ensure inclusive and equitable quality education and promote
lifelong learning opportunities for all.
MOBILE OPERATOR INITIATIVES

Mobile operators are working to support students and teachers integrate mobile
technologies into the classroom. Mobile also enables access to greater learning
opportunities for youth in urban hubs and remote locations.

CASE STUDY

Developers of the Future, Turkey

Turkcell’s Developers of the Future brings together people who have an interest in software
development in the mobile and digital world. The aim is to help 50,000 mobile application
developers receive technical training and develop applications, commercialise the applications,
and grow qualified human resources for both Turkcell and the wider mobile ecosystem.

Clean water and sanitation

Ensure access to water and sanitation for all.
MOBILE OPERATOR INITIATIVES

Clean, accessible water for all is an essential part of the world we want to live
in. There is sufficient fresh water on the planet to achieve this. But due to bad
economics or poor infrastructure, every year millions of people, most of them
children, die from diseases associated with inadequate water supply, sanitation
and hygiene.
Water scarcity, poor water quality and inadequate sanitation negatively impact
food security, livelihood choices and educational opportunities for poor families
across the world. Drought afflicts some of the world’s poorest countries, worsening
hunger and malnutrition.

CASE STUDY

The Origin Project, Egypt

The Origin Project is a comprehensive initiative that tackles the problem of water scarcity, with
the aim of raising awareness of the need for water conservation in Egypt. Through this project,
Etisalat has been able to provide and increase access to household safe water connections
in poor communities, thus improving the health and nutrition of children in the targeted
communities through reducing the frequency of diseases related to poor quality water and
hygiene. So far, half a million Egyptians have benefited from a clean water supply through the
project.

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Employment
Promote sustained, inclusive and sustainable economic growth, full
and productive employment and decent work for all.
MOBILE OPERATOR INITIATIVES

The mobile industry creates jobs directly and indirectly through accelerating
economic growth and enabling innovation.
The internet is the most important enabler of social development and economic
growth of our time. Mobile connectivity is the primary method for connecting to
the internet today and is a key driver of innovation.

CASE STUDY

JobMatch, Palestine
Souktel partnered with the World Bank and the Palestinian Ministry of Education to launch the
mobile JobMatch service on four Palestinian college campuses. Three of them had never offered
any type of career resources to their students. After 12 months of use by 400 new college
graduates, over 25% of users had found work/internships through Souktel (versus a 15% success
rate at traditional HR firms) and more than 60% of employers using the service had cut hiring
time and costs by over 50%.
Students quickly embraced the service for its ease of use and cultural relevance – women could
find jobs without having to travel to the city, and job searching via SMS could be quickly done
between classes or while on the go. Since the initial pilot, JobMatch has grown into a nationwide
service, with 10,000+ daily users across the West Bank.

Reduced inequalities
Reduce inequality within and among countries.

MOBILE OPERATOR INITIATIVES

Asia Pacific is the world’s most disaster-stricken region, affected frequently by

hydrological (e.g. floods, droughts, typhoons) and geophysical (e.g. earthquakes)
disasters.
Mobile networks and the connectivity they provide can be a lifeline for those
affected by natural disasters and other humanitarian emergencies. They are vital
to facilitating access to information and coordinating assistance within affected
populations and among governments, first responders and the international
humanitarian community.

CASE STUDY

Vodafone Turkey Farmers’ Club

The service provides text updates on local weather forecasts, market price information, general
information on the agricultural sector, agronomy tips and news.
As an example, one user saved TRY60,000 ($17,000) worth of product when she received a
weather warning from the Farmers’ Club forecast service. Before she started using the service,
she was not able to prepare for difficult weather conditions.

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Sustainable cities
Make cities and human settlements inclusive, safe, resilient and
sustainable.
MOBILE OPERATOR INITIATIVES

The MENA region has suffered considerable political upheaval over the last decade.
Ongoing disputes in countries such as Iraq, Yemen and Syria have led to mass
migration as civilians flee conflict zones. Of the 10 countries with the highest
number of displaced citizens in 2015, four were in the MENA region, and the region
accounts for 39% of the global displaced population.22
Mobile networks and the connectivity they provide can be a lifeline for those
affected by such humanitarian emergencies. They are vital to facilitating access to
information and coordinating assistance within affected populations and among
governments, first responders and the international humanitarian community.

CASE STUDY

Jordan
Due to the war in neighbouring Syria, there are currently an estimated 2.9 million refugees in
Jordan, accounting for nearly 30% of the country’s 9.2 million population.23
At the Za’atari refugee camp, the UNHCR distributes SIM cards to all incoming Syrian refugees
and records each of their individual phone numbers in their database. Group SMS messages
can then be used to ask individuals to update or verify their personal details, or to track refugee
movements and maintain communication with those who have left refugee-designated areas.
Mobile devices are also being used to scan the barcodes found on refugees’ identity documents
and verify whether they are eligible for a range of services, such as food, clothing or cash aid.

22. UNHCR
23.“Population stands at around 9.5 million, including 2.9 million guests”, The Jordan Times, January 2016

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3
Policies for
a digitally
advanced
society

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With the rapid evolution of digital technologies, continually upgrade and expand mobile services
businesses are growing more efficient and creating in the region. Since taking the first steps towards
new commercial opportunities, while consumers are sector privatisation and market-based competition
embracing mobile-centric lifestyles. The benefits two decades ago, telecoms authorities have played
of digitalisation across the economy and society a crucial part in enabling mobile networks to
are evident — certainly for those who live in the become the ‘nervous system’ of a truly connected
advanced urban centres across MENA. Digital society.
entrepreneurship in the Gulf region has generated
The digital transformation, however, is by no means
many success stories, including e-commerce player
complete. Technological advances are surging
Souq.com from Dubai and food-ordering service
ahead, releasing a flood of connected devices that
Talabat.com, which started in Kuwait City. In an era
will soon permeate modern society and industry.
of massive urbanisation, Dubai is recognised as a
However, a persistent digital divide exists where not
leading smart city, using connectivity and mobile
everyone is able to engage with the digital economy.
networks to create an efficient, convenient and
More should be done to foster digital innovation
sustainable environment for its citizens.
and ecosystems in the MENA region. Meanwhile, the
Public policy and regulation are key factors in the mobile sector is subject to a host of regulations that
spread of mobile-enabled services across MENA. By hold back operators’ ability to fully participate in the
setting the right regulatory context, governments dynamic digital economy.
create the incentives for mobile operators to

3.1
Advancing digital transformation
Telecoms markets have changed considerably over by mobile users across the MENA region, are by
recent years with the convergence of technologies comparison very lightly regulated, despite offering
and services and the emergence of internet comparable communications services such as voice
players and the digital ecosystem. However, the or messaging. This creates unnecessary market
policy framework for the digital ecosystem has distortions and holds back an entire industry.
not kept pace with this movement to a data-
Policymakers should strive to set policies that
focused economy and has left aspects of telecoms
foster competition and protect consumers, without
regulation obsolete.
impeding technological, social and economic
Telecoms regulation was devised for an industry progress. This will require a fresh look and update
that no longer operates in the same way and to regulations so that they better reflect today’s
faces competition from many directions. Mobile technologies and markets. By lifting the burdens
operators should be allowed to compete equally on the mobile sector, policymakers can generate a
with other digital players, but they remain surge in the digital development of the economy
constrained by legacy regulations. Internet and society, on par with the most advanced
players, whose services have been embraced economies worldwide.

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3.2
Modernising regulation: three focal points
The GSMA encourages governments across MENA to review and
recalibrate telecoms policy to advance the digital transformation and to
reflect the new market dynamics. There are three key areas that require
close attention: the rules governing the use and storage of consumer data,
licence duration and renewal, and the costs incurred by mobile operators.

Use and storage of data Licence duration and presumption of

Cross-border transfers of data play an important renewal
role in innovation, competition and economic and The prospect of licence expiry creates significant
social development. While data security and privacy uncertainty for mobile operators, which has the
are fundamental to building consumer trust in effect of stifling investment in network infrastructure
digital services, the free movement of data enables and operations. A transparent, predictable and
the digital economy to operate efficiently. As a coherent approach to licence renewal is therefore
result, consumers benefit from wider service choice, important, enabling operators to make rational,
global service quality and lower service prices. long-term investment decisions. The GSMA
Companies that are able to treat data consistently recommends that governments and regulators
across their international operations can innovate work on the presumption of licence renewal for
more rapidly, achieve larger scale and reduce costs. existing licence holders. Exceptions should only
Requirements for companies to store and process apply if there has been a serious breach of licence
data domestically, for example, create unnecessary conditions. New licences should be granted
duplication and cost for companies, and there is for longer terms, so that investors can realise a
little evidence that such policies produce improved reasonable return on their investment.
privacy protections for individuals.

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Cost of doing business spectrum efficiently to mobile operators that are

able to deploy networks quickly and generate
With the nascent 5G mobile technology set to
the most use from their frequency bands. Again,
enable a new wave of products, services and
the primary goal for policymakers and regulators
industrial advances across the economy, mobile
should be to maximise the value to society
operators must find the means to deploy the
– rather than the revenue to the state – from
infrastructure and adapt to the new digital
spectrum use.
landscape. This next phase of mobile evolution is
underway, even as operators are upgrading and • Sector-specific taxes can raise consumer prices
expanding their networks to meet the massive and deter the uptake of mobile services, slowing
growth in mobile data and to extend mobile service the adoption of digital technologies overall.
further into rural areas. Policymakers and regulators Lowering this kind of tax benefits consumers
must recognise that, to achieve their government’s and businesses and boosts socioeconomic
policy objectives for digital development, mobile development. This can, in turn, accelerate digital
operators must have the resources to extend development and increase government revenues
and improve their networks, and the commercial in the medium to long term.
justification for ongoing investment. Costs imposed The GSMA advises that policymakers take a
by governments through licence fees, spectrum and fresh look at legacy rules and discard those
taxation, among many other obligations, could in that are no longer relevant, while paying close
some jurisdictions be quite prohibitive, and have a attention to policies that may discriminate
significant impact on the industry’s ability to deliver against communication providers relative to other
advanced mobile connectivity across the region. The participants in the digital ecosystem. In many
industry recommends the following approaches: cases, intense competition in the ecosystem
• Licence fees should be set at a level that helps means regulation is no longer needed, or can be
governments recover the costs of administering significantly scaled back. Tomorrow’s technologies
licences and regulating the sector – but should must not be stifled by yesterday’s regulation. By
not be used to maximise government revenue. updating the regulatory framework, policymakers
can ensure that government and industry are
• Spectrum costs constitute the largest
aligned to create a growing digital society for
investments that mobile operators must make.
everyone.
Spectrum auctions designed to get the highest
price can undermine the objective of allocating

Policies for a digitally advanced society 51

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