Think big

Medhat Khalil, chairman and CEO of Raya Holding, spoke to Niveen Wahish about what he believes lies ahead for Egypt's CIT industry

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Medhat Khalil

Raya Holding is the largest Egyptian company specialising in IT and telecommunication industries. Set up in 1998 the company today boasts a paid-in capital of LE99.19 million. It also plays a role in training IT professionals at its Raya Academy.

What form will your participation at the Cairo CIT 2005 take?

We are not taking part as a separate entity, but we are taking part with other companies such as Sun, Cisco and the Ministry of Administrative Development with whom we carried out a number of projects related to the E-government and the mechanisation of various operations in various ministries and municipalities.

What will this year's event say about Egypt's CIT sector?

Egypt's CIT sector has come a long way since the establishment of the Ministry of Communications and Information Technology [MCIT]. The Free Internet initiative has created a boom in Internet usage and awareness especially among youths and the public at large. The number of personal computers and Internet users has doubled. There is beginning to be better and larger local content. All this will be reflected in the exhibition.

What does it tell about the industry?

In telecoms there has been great development. It is more mature and there is great opportunity for international companies to set up here, particularly with the liberalisation of the telecom sector by the end of this year. This is an opportunity for large international companies to come and set up here in the near future.

We are committed to liberalising the telecom sector by the end of this year. Currently the Ministry of Communications and Information Technology is working on how this liberalisation will take place and how licences will be granted. We are at a stage where we are regulating this liberalisation and identifying the opportunities in this area.

Will Egyptian companies be able to compete?

The big companies will be able to compete and partnerships will develop.

How has Raya developed?

In 2003 our revenues reached LE750 million. Last year that figure grew by around 30 per cent to LE1.1 billion. We now have 1,700 employees. We have branches in Riyadh, Jeddah, Dubai. In the next two months we will be opening in Algeria and in the first half of the year we plan to open in Qatar. We are also studying opening up in Libya and Sudan. And we have a subsidiary in the US. Regionally, we have done work worth $20 million which is all value added, services performed by our people. We aim to boost this to $30 million.

You had planned an Initial Public Offering [IPO] in 2000 but it never came through. When can we expect it?

We do not find ourselves in immediate need for an IPO at the moment. The IPO is resorted to by companies who need to increase their capital drastically and broaden their ownership basis. We are doing well cash wise. Our companies are doing well. However, an IPO remains a demand by our big investors. And it is important because it will enable us to raise capital easily; it will give us financial credibility.

We did not do it because the market was not doing well. The market this year is in better shape. We have chosen Beltone Financial as our consultants for an IPO. We are waiting for them to tell us when the timing would be suitable and other related details. We expect an IPO this year but not before the middle of the year. It will mean more expansion regionally and locally.

The company has raised its capital three times since it was established through private placements. The latest capital increase is some $8 million invested by the Injazat Technology Fund and the Islamic Corporation for the Development of the Private Sector (ICD). The money they provide will be used to expand regionally and in the telecom area.

Where is Egypt as a whole as an exporter of CIT?

Egypt is at the beginning of the road. It has potential in software programming and services and in the call centre services. The call centres in Egypt are already providing services to international companies.

We also have potential in programmings but it needs to be developed. The government should encourage and take part in the creation of three or four huge companies. We have a lot of companies but they are all small. Large entities are needed in this industry. Small companies cannot make it in the industry alone.

The government should also encourage local products but that is not happening. However, it has aggressively begun to train and educate.