July 2000

Morocco Update Memo

The following report outlines new developments in the past three months and the state of on-going developments.

The major obstacles to the implementation of alternative networks in Morocco are principally legal in nature. The legal framework is now being put in place, but the monopoly position of Maroc Telecom will continue to hinder the development of alternative networks in the foreseeable future.

1.The interaction between business and regulatory constraints

1.1 Business constraints and entry barriers

As stated in our previous reports, the major obstacles to the implementation of alternative networks in Morocco are principally legal in nature. The statutes of the companies that have the technological infrastructure and knowledge to offer such services can not legally contain such previsions.

Even if the legal framework was put in place (see below), there are other obstacles that that further complicate the picture. The traditional telecom operator, Maroc Telecom, is a major stockholder in the " Autoroutes du Maroc ", the holding firm that it the owner of most of the telecommunication infrastructure in Morocco. The implications of this ownership became very clear during the negotiations between "Autoroutes du Maroc" and the second GSM operator, Medi Telecom. The latter company flatly refused to negotiate the use of its lines by an operator other than Maroc Telecom, arguing that any such transaction would create a potential "conflict of interest".

Although the ANRT provided intermediation in this conflict, it can be assumed that Maroc Telecom is in a position to influence any decision concerning alternative networks in Morocco, and for that matter concerning the telecommunication sector in general. Medi Telecom has reacted by opening up discussions with a local partner in the air transportation industry. The latter has potentially the technical infrastructure to support an alternative network service, but the legal implications of such a move remain unclear.

It should be kept in mind that the regulatory body, the ANRT, is not today legally competent to intermediate in the area of alternative networks. If called upon to do so, its statutes would have to be amended accordingly.

1.2 On going regulatory developments concerning alternative networks

The following legal measures will be addressed in the coming months:

• A regulatory framework to permit the development of alternative networks.
• The revison of the statutes of companies that may be interested in offering alternative network services.
• The amendment of the statutes of the ANRT to allow the agency to intermediate in this area.

2. Types of operators using the networks

The principal actor for the moment is of course the second GSM operator, Medi Telecom, who will need an alternative network if it wishes to further develop its infrastructure and services.

Many other firms (including potentially France Telecom and Vivendi) will be actively exploring the possibility of alternative networks to exploit the different regional and national telecommunications licenses to be offered in 2001 and 2002. The owners of local networks will also be active in this area as they extend the services and packages offered through traditional "fixed" telephone systems.