1. 1 Licensing in Morocco M. ELKADIRI, Technical Director, ANRT elkadiri@anrt.net.ma 1st REGULATORY MEETING FOR THE ARAB REGION Algiers 19-21 April 2003

2. 2 LICENSING : A TRANSITION PHASE IN THE LIBERALIZATION PROCESS Strategic focus Key regulatory moves Complete deregulation (full competition) Transition period (limited competition) State owned monopoly –key decisions are driven by need to deliver operator benefits to create healthy market: Limited price reductions No market value destruction Operator´s viability guaranteed Encourage development of infrastructure and of new service offerings But, avoid any unnecessary burdens for operators and regulators –decisions are driven by focus on consumer benefits: High price reduction Broad range of service offerings –Tariff re-balancing towards cost –Controlled increases in number of licenses –Managing incumbent to be prepared for competition –Creating favorable regulatory environment for entry (e.g., interconnection) Arbitration of interoperator disputes

3. 3 Legal Framework : REGIMES in the MRC TELECOM SECTOR Licenses for public networks; Authorizations for the independent networks; Declaration for value added services ( such as the Internet..); Freedom for the internal networks;

4. 4 LICENSE STRATEGY IN THE CONTEXT OF A BROADER REGULATORY STRATEGY Regulatory objectives and constraints –Perform diagnostic of Moroccan market –Understand regulatory objectives and policy priorities –Determine external constraints and draw implications for the licensing strategy Regulatory objectives and constraints –Perform diagnostic of Moroccan market –Understand regulatory objectives and policy priorities –Determine external constraints and draw implications for the licensing strategy ObjectivesKey leversAction plans License details –Rights and obligations –Bidding process –Award criteria Guidelines on levers –Interconnection rates and regime –Equal access terms –USO source/structure License strategy –Industry structure, license scope –Target operator profiles License strategy –Industry structure, license scope –Target operator profiles Other regulatory levers Support strategy using –Interconnection –Equal access –USO Other regulatory levers Support strategy using –Interconnection –Equal access –USO Direct incumbent regulation –Consider adaptations to regulation of incumbent, e.g., quality of service requirements Details on incumbent regulation –CdC, including any future changes

5. 5 SHORT DIAGNOSTIC OF THE MOROCCAN MARKET Short diagnostic of the Moroccan telecom sector Understanding of regulatory objectives and policy priorities Understanding of regulatory objectives and policy priorities Understanding of constraints in the transition phase An investigation into the key problems for Moroccan market Availability of services Prices Customer service (QoS) Service needs ( business and residential) Specific markets valuation

6. 6 Short diagnostic of the Moroccan telecom sector Understanding of regulatory objectives and policy priorities Understanding of regulatory objectives and policy priorities Understanding of constraints in the transition phase Understanding of constraints in the transition phase –Choosing a regulatory objective scheme requires an analysis of trade- offs Ensure harmonious development of the sector Create benefits for existing customers Take into account the impact on the overall economy Evaluate impact on government finances –These objectives and priorities suggest what “success” could mean for the regulator UNDERSTANDING OF REGULATORY OBJECTIVES AND POLICY PRIORITIES

7. 7 Short diagnostic of the Moroccan telecom sector Understanding of regulatory objectives and policy priorities Understanding of regulatory objectives and policy priorities Understanding of constraints in the transition phase Understanding of constraints in the transition phase –While the regulatory objectives define the goals of the licensing process, external political and legal constraints will limit choice in designing the licenses limited number of new players (agreed with government) license terms will be limited by the bounds of existing regulations –These constraints should be seen as part of a transition phase where the number of competitors may be limited to ensure investment in service offering –The regulatory objectives and external constraints lead to some key implications for industry structure in the transition phase –Beyond the transition phase, regulation will change UNDERSTANDING OF CONSTRAINTS IN THE TRANSITION PHASE

8. 8 LICENSE STRUCTURE MUST MAXIMIZE VALUE TO BOTH BIDDER AND REGULATOR attractive financial opportunity Fits with overall strategy Delivers success against the regulatory objectives Any license option must meet both the bidder’s and the regulator’s criteria in order to maximize the total value generated Maximize value to bidder Maximize value to regulator Maximize value to bidder and regulator

9. 9 A BALANCED REGULATORY ENVIRONMENT –Balanced Interconnection regulation Right to interconnect at all levels with multiple points of interconnection Decline towards competitive cost-based rates Credible dispute resolution mechanism Interconnection USO –USO policy must be fair as all operators will contribute to the fund Pricing –Pricing freedom to the largest possible degree –No price discrimination allowed And…… preselection, unbundling, number portability…

10. 10 Licensin in Morocco Legal Framework : The Telecom Act of ’97 Licensing regime for new entrants Standard Interconnection Offer Free setting of commercial tariffs by operators Creation of an independent regulator –Manages licensing process for new operators –Arbitrates interconnection disputes –Manages frequency spectrum and allocates frequencies to operators

11. 11 Legal Framework : OPERATORS RIGHTS Right to Interconnexion. Right to access the state public and private domain Right to access the ‘high level points’ Right to frequencies Freedom of prices with the exception of universal access services prices. Right to numbering.

12. 12 Set and exploitation of telecommunication networks Call for bid License Prescriptions –Drafted by ANRT –Approved by the administration –Licenses instruction : ANRT Attribution decree LEGAL FRAMEWORK : LICENSING PROCEDURE

13. 13 SELECTION PROCEDURE Choice and Weighting of the different criteria Criteria Definition Diminishing the uncertainties Depend on the license objectives  Decomposition of the criteria (to be measured)  Minimization of subjective factors  Beforehand communication of the rules related to call for bid defining the procedures and the criteria LEGAL FRAMEWORK: LICENSES INSTRUCTION

14. 14 License elements GSM 2 in MOROCCO Discussions beforehand for the definition of the elements Call for interest Pre-qualification A true complete license : Authorization to establish its own infrastructure Dedicated GSM bands Dedicated numbering Free tariffing Own international gateway (2002) Defined interconnexion scheme BUT No negotiations afterward Strict deadline

15. 15 2nd GSM LICENSE PREDICTABILITY OF LICENSE TERMS Terms of license = tender documents + bids ( coverage, fees, QoS,… ) = +

16. 16 2nd GSM LICENSE EVALUATION CRITERIA

17. 17 2nd GSM LICENSE EVALUATION RESULTS

18. 18 2nd GSM LICENSE A SUCCESS STORY The record license fee reflects investors perception of a low regulatory risk and a clear and transparent licensing process

19. 19 Evolution of Mobile Communication tariffs (Incumbent post payed tariffs) (Incumbent post payed tariffs) 97 Telecom Act GSM2 license RESULTS OF THE MOBILE LIBERALIZATION : Tariffs going down Prix de la minute (en Dh hors taxes) Tariffs(Dh)/min ( VAT excluded) Fixed long distance tariffs have been readjusted Fixed long distance tariffs have been readjusted GSM2 license Tariffs(Dh)/min ( VAT excluded)

20. 20 COVERAGE OF THE INCUMBENT’S NETWORK -> 61.0 - 68.0 -61.0 - 75.0 -68.0 - 80.0 -75.0 - 80.0 -86.0 - 110.0 -86.0 - <- 110 RESULTS OF THE MOBILE LIBERALIZATION

21. 21 2nd GSM LICENSE: Some Lessons Clear regulatory framework (interconnection regime, dispute settlements, frequency allocation process…) Independent regulatory agency Transparent licensing process Huge market potential

22. 22 Bidder capabilities Human ressources Financial ressources Parteners 60%Licence fees 20%Coverag and QoS 15%Tariffs 05%Coherence of the bid Selection Criteria 50%Licence fees 25%Technical Coherence 25%Tariffs GMPCS GSM VSAT Awarded LICENSESLicence: 1.1 B $ Licence: 10 M $ Trunk Systems Bidder capabilities Human ressources Financial ressources Parteners

23. 23 Services offerts :. Téléphonie fixe, Téléphonie mobile. Telex, fax, videotext. Transmission de données. Téléconférence. Internet. Radiomessagerie. Transmission télévision. Messagerie vocale. MARNIS (services numériques) Intégration de réseaux Opérateurs principaux Opérateurs de licences VSAT Opérateurs GMPCS Autres sociétés Maroc Télécom Médi Télécom SpaceCom Telenor Gulfsat Maghreb Orbcom Maghreb Global Star, Tesam Services offerts :. Téléphonie,. Fax C. Echange de messages. Services Internet (ISP). Distributeurs. Conseil en télécommunication Services offerts :. Vidéoconférence. Téléconférence. Intranet. Internet. Services et solutions “avancés” Opérateurs 3 RP European DataComm Maghreb Soremar Thuraya Maghreb Services offerts : Réseaux radioélectriques à ressources partagées (iDenetTetra) Inquam Telecom Moratel Equipementiers. Data Moroccan Teleco Market Overview

24. 24 CONCLUSION Licensing process should fit the actual environment, as well as the development objectives of the sectors. It should be tailored to take into consideration –The exact needs of the operators, the regulator and the state, –With a view of maximizing their profits, and those of the end users.

25. 25 MERCI POUR VOTRE ATTENTION www.anrt.net.ma