The telecom market size of Algeria will be $7.36 billion in 2018 with the highest growth potential in broadband segment, a report revealed on Thursday.
According to the study conducted by Frost & Sullivan, mobile subscriber growth rates are projected to slow down even as mobile penetration rate was expected to reach 100% by the first quarter of 2012.
3G services are likely to be the next major trend in the Algerian market and are set to boost broadband penetration. However, an inefficient regulatory environment threatens the development of the telecom industry.
Algeria has a 2.5% broadband penetration rate as of 2011. However, the demand for high speed data services is evident and is expected to increase, thus driving its growth.
Algeria has among the lowest broadband penetration rates in the North Africa region. The fixed-line broadband services are monopolised by Algerie Telecom as all the ISPs have to use its network.
“Young consumers access the Internet through shared facilities like Internet cafes which are gaining popularity in the country. This trend restricts the adoption of individual broadband connections which are mainly adopted by the enterprise segment,” Jonas Zelba, Research Analyst at Frost & Sullivan, said.
The leading business research and consulting firm said mobile and wireless services will be the key drivers of broadband adoption in the country. The expected launch of 3G services in 2012 could also accelerate broadband growth. In 2009, Algerian Telecom developed a major 5-year $6 billion infrastructure development plan.
Fixed-line monopoly and delayed privatisation of the incumbent is causing limited infrastructure upgrade and poor quality of service.
Telecom regulator, Post and Telecom Regulatory Authority (ARPT), has been ineffective in policing the networks’ behaviour and has delayed some key licensing decisions. For example, its imposition of pricing control, restricting prices beyond a certain level or the delayed issue of 3G licences has limited the development of operators.
ARPT should speed up 3G license launch as the growth in the telecom industry is now expected to be driven by broadband segment. The launch of 3G services is likely to accelerate broadband growth, according to Frost & Sullivan.
Vendors should seek opportunities to implement their solutions and provide support in 3G network expansion. Operators have already planned huge investments due to the anticipated launch of 3G.