An Analysis of the Mobile Telephone Sector in MENA: Potential for Deregulation and Privatization

Abstract This study evaluates the growth and trend in the mobile telephone sector in several MENA countries between 1995 and 2007. We find that the magnitude of demand elasticities do not entice collusive behavior between service providers because the effect of price reductions is neutral on total revenues; we also find that the cost of service and administrative corruption have a strong negative effect on mobile penetration, which, surprisingly, is higher in countries with more unequal income distribution. With respect to the degree and scope of liberalization of the mobile sector, we find that the direction of deregulation is accelerated in countries with a high proportion of investment, where the sector generates high revenues, and where civil society is generally free from government interference. At the same time, the liberalization is slowed in countries characterized by a high-income inequality and average cost of service. The study discusses how market reforms in developed countries fail to translate to developing countries because several negative externalities are often overlooked. We identify several factors that should be considered for liberalization to succeed and explain how to design a strategic path for reforms in the mobile sector. Arabic Abstract: