Briefs

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Downward trends

THE CENTRAL Bank of Egypt (CBE) last Thursday decided to reduce its overnight deposit rate by 25 basis points to eight per cent per annum down from 8.25 per cent, and the overnight lending rate to 10 per cent per annum down from 10.25 per cent.

The decision was undertaken by the CBE's Monetary Policy Committee (MPC) and is based on an assessment of recent economic developments, particularly inflation rates which a CBE press release described as "holding up at moderate levels".

The press release added that recent economic developments show that growth had accelerated in the first half of 2005/06 but was not inflationary because of the existence of "un-utilised capacity" in several economic sectors.

This is the fourth cut which the MPC has undertaken to overnight deposit and lending rates within less than a year. When MPC was first established in June 2005 overnight deposit and lending rates stood at 9.5 per cent and 12.5 per cent respectively. In September 2005 these rates were dropped to nine per cent and 11.5 per cent respectively. Then in December 2005 the CBE reduced its overnight deposit rate points to 8.75 per cent. This decision also reduced the overnight lending rate to 10.75 per cent. A couple of months ago the MPC cut overnight deposit and lending rates by 50 basis points to 8.25 and 10.25 per cent respectively. Observers say that these steps signal a downward trend for all types of deposit and lending rates.

In mid-March MPC had announced that it will no longer be holding its meetings every four weeks as it had done since its founding. The committee will now convene every six weeks. MPC's next meeting is due on 18 May.

Date extended

THE NATIONAL Telecommunications Regulatory Authority (NTRA) has postponed the deadline for submission of proposals for the third mobile license in Egypt. The deadline, which was originally scheduled for 17 April, has been changed to 4 May. The extension was announced in response to a number of consortiums which asked for more time to prepare the needed documents. Potential bidders numbering 21 companies had bought the information booklet which outlines the terms of competing for the third licence. After the NTRA has received the proposals by 4 May, a period of evaluation will follow which is expected to take from six to eight weeks. Companies which meet the technical criteria will then be invited to an open auction for the licence, which will then go the highest bidder.

Companies intending to bid for the licence are already announcing their partners. Telenor, a leading mobile operator based in Norway last week announced it was teaming up with the National Telecommunications Holding Corporation (NTC) as its local partner. Telenor is hoping that its expertise with some 83 million subscribers worldwide, coupled with NTC's know-how of the local market will help provide the needed infrastructure to support the new company.

Jan Edvard Thygesen, executive vice president and head of Telenor Central and Eastern Europe told a press conference last week that he is confident the third mobile operator will be a success. Thygesen said that his company, which entered the Pakistani market a year ago and is currently competing with six companies operating there, has succeeded in cornering 10 per cent of the market share.

Other potential bidders include Telecom Egypt which has not yet announced whether it will enter the race. TE's management is still weighing the odds between remaining, as it currently is, a shareholder of the operator Vodafone Egypt, or venturing into a new company which is predicted to corner a limited market share of 20 per cent. The race for Egypt's third mobile licence includes South Africa's MTN and Kuwait's Mobile Telecommunications Company (MTC), as well as Saudi Telecom, Etisalat Dubai, BATELCO, TURK CELL and Telecom Italia.