Lebanon’s mobile market has a number of characteristics which point to great potential for future investors. To date, the penetration rate has been relatively low compared to other countries in the region, standing at 35% in 2008. The favorable demographic mix, with a large population of youth is another plus.
The pent-up demand for mobile telecommunications will be one of the key drivers for future growth of the mobile market. Other major motivators include government commitment to forward-thinking policies and the presence and support of an independent regulator, the TRA. As competition between operators intensifies, it is anticipated that costs of services to the end consumer will fall, providing more encouragement for market growth.
The characteristics of the Lebanese mobile market indicate great long-term potential. These include high usage at an average of 399 minutes per month compared to 142 in Jordan and 125 in Egypt. The fact that this number has remained stable despite a recent increase in penetration is an interesting indication to potential investors. In 2008 ARPUs were significantly higher than other countries in the region, standing at an average of $76 per month compared to $18 in Jordan and $12 in Egypt. In addition, annual consumer spending on mobile services is consistently higher than in other countries, representing 7.6% of GDP per capita (PPP)1 compared to 4.1% in Jordan2 and 2.5% in Egypt3. To date, service offerings have not been as tailored to the end consumer as in other markets, with proper segmentation and provisioning of unique mobile services not yet developed in Lebanon. This translates as multiple opportunities for new operators to address existing subscribers, attract new customers and increase general usage.
With its strong private sector, service-based economy and huge pool of highly-educated and multilingual workers, Lebanon offers a highly attractive consumer base for mobile operators. In addition, the Lebanese are amongst the most technology and communication savvy consumers in the region. In part, this is attributable to links with the vast Lebanese Diaspora – estimated to number up to 10 million - who provide contact with the latest technological trends from across the world. With many of the Lebanese diaspora regularly returning to visit Lebanon, and with Lebanon representing a major tourism centre for Middle Eastern tourists (more than 1.3 million tourists in 2008), the country offers a unique and highly profitable roaming opportunity to mobile operators.
Based on a thorough market assessment and field survey, the TRA was able to forecast the impact of mobile market liberalization on both tariffs and penetration. In case the two incumbent mobile networks are privatized in 2010 and the third mobile license to Liban Telecom is granted in 2011, the TRA expects the penetration to reach at least 60% within four years after liberalization. This translates in approximately 2.66 million subscribers in the mobile market by 2014.
On the prices level, the entry of the third mobile operator will drive prices down, the TRA expects the two mobile incumbents to drop their prices by almost 30% initially. Over the long term, prices are expected to decrease at a rate of 5% annually. The fall in average prices for the connection and airtime is expected to be counterbalanced by an increase in average usage by existing subscribers and by an increase in the number of subscribers.
1Source: International Monetary Fund
2Source: Arab advisors Group, TRA Analysis
3Source: Arab advisors Group, TRA Analysis