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July 17 2004

The mobile handset market in the Middle East and Africa jumped by almost 26% in 2003, with shipments surpassing 40 million units across the region. According to a new IDC study, sales were highest in the Middle East, reflecting the region's more advanced level of economic development compared to most of Africa.

Handset sales will rise strongly, reaching close to 50 million this year and expanding consistently through 2008 as shipments in many underdeveloped markets surge. At this point, overall mobile penetration will remain relatively low, especially in Africa, and major growth will still lie ahead.

As the largest single market in the Middle East and Africa, Turkey accounted for about one-fifth of all handset shipments in 2003. Competition is already well established in the mobile market there, but economic woes have caused the market to lose steam in the last few years. The second and third largest markets, South Africa and Morocco, are also showing signs of saturation and will exhibit only low to moderate levels of growth in the next few years.

By contrast, demand is taking off in several of the region's other large developing nations, notably Nigeria, Iran, and Pakistan, and also in many smaller ones. "There is something of a changing of the guard going on in the mobile business of the Middle East and Africa," said Simon Baker, research manager for Mobile Phones, IDC CEMA. "A couple of years ago it was largely a matter of looking at Turkey and South Africa and then totting up the smaller countries together. Today many states in Africa and most in the Middle East are no longer pioneer territory, but emerging markets are beginning to notch up significant growth as they move into the rapid expansion phase of the typical 'S' curve."

In the shorter term, the Middle East will remain more important than Africa. With a higher level of urbanization, a more developed infrastructure, and a higher standard of living in general, development will be more rapid. Cairo, Tehran, and Karachi will become key city markets.

Lagos will also be among the top 5 Middle East and Africa city markets by 2008. Nevertheless, IDC believes that despite the evident pent-up demand for mobile communications across Africa, poverty, political instability, and a lack of rural development will slow growth.

IDC contends that GSM will continue as the ubiquitous standard of choice for mobile networks across both the Middle East and Africa. "The wide choice available in GSM handsets and the importance of roaming in regions with so many nation states have clinched the argument for the medium term," said Baker. "There is a future for CDMA, but it lies mainly in wireless local loop applications in the many countries in Africa where the fixed-line network is very limited."