Algeria: Internet penetration and infrastructure

28 Sep 2001

With fixed-line penetration at less than 5% and mobile penetration at a dismal 0.2%, Algeria’s telecoms sector remains vastly underdeveloped

Internet penetration
Only 2,000 users were connected to the Internet in 1998, according to EIU data. While the number has risen since, the Internet penetration remains tiny, even compared to other developing nations.

Connectivity infrastructure
Connectivity is poor, particularly owing to the civil conflict of the early 1990s that devastated infrastructure in some regions. In 1998 the country had 1.47m main telephone lines, or 5.3 telephones per 100 people. Access is higher in urban areas than in rural regions.

While the rest of the developing world is witnessing rapid adoption of mobile telephony, Algeria had only 18,000 mobile subscribers in 1998, or 0.060 per 100 people. Only five people in 1,000 owned computers, though PC ownership is growing. Dial-up connections are the most popular way to access the Internet for now; the government is promoting broadband access by allowing companies to lay fibre-optic cables.

Telecommunications market
The government sees the development of the telecoms market as a precondition for attracting foreign investment. A new telecommunications law, currently in draft form, promises to bring about sweeping reforms to the country’s stagnant, state-owned telecoms sector.

The bill, which was passed by the lower chamber of Parliament in July 2001, aims to separate the PTT into two entities--post and telecoms--open for partial privatisation. It also mandates the establishment of a regulatory authority and the sale of a GSM licence to the private sector. The PTT plans to put to tender three separate contracts for advising the ministry in its restructuring, the creation of the regulatory authority, and the GSM licence tender process.

In an effort to modernise the country’s network, the PTT has been installing fibre-optic lines and digital systems, working with Ericsson of Sweden. In 1998 South Korea's Daewoo agreed to supply cable and fibre-optic technology.

Algeria’s potential for telecoms growth will make any tender plans for a new GSM licence more attractive to investors, particularly given the boom seen in the markets of Morocco and Egypt, where duopoly competition has been introduced. In fact, the PTT estimates that over 450,000 applicants have requested mobile phone lines since the launch of the country’s first GSM network in 1999.

In September 1999 investors from Egypt, the UAE and Jordan signed an agreement with a local firm, Heelit Holdings, to form a mobile telecoms company. Heelit was awarded a GSM licence to operate across the whole country. The first phase of the project was completed by end-1999, with the network operational in January 2000.

A second GSM network will be held by private owners. Egyptian mobile phone operator Orascom Telecom (OT) won the licence with a bid of US$737m; Orange, the only other bidder, offered US$422m. The licence, to be issued in December 2003, is for 15 years.

ISP market
In March the Ministry of Posts and Telecommunications granted five new operating licenses to Internet service providers in Algeria, bringing the total of licensed ISPs to 18. Only two are presently functioning, however. The local market for Internet services was only opened to private investors in 1998. Licensed providers have up to one year to begin operations; after that they risk losing their licence.

One of the most prominent ISPs is Ghardaia (http://www.ghardaia.net), which offers a graded system of Internet access according to set fees. Another ISP is wanadoo of France, which has operations in Algeria.

Source: The EIU ebusiness forum.

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