13 - 19 July 2000
Issue No. 490
|Published in Cairo by AL-AHRAM established in 1875|
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Larger net for bigger fish
By Amira Howeidy
The deal made for a dramatic news event -- and the protagonists made sure it was the most exciting episode in the information-technology (IT) sector since the formation of a Communication and Information Technology Ministry last October. But then, that's why it happened.
Orascom Telecom (OT), the country's largest private IT company, already owned 40 per cent of Egypt's largest Internet service provider (ISP), In Touch, and 51 per cent of the second largest, Link Egypt, when it purchased the remaining 60 per cent of In Touch last April. A merger between the two ISPs was thus predictable, but it took two months for the news to break officially with a press conference as well as on Link Egypt and In Touch's Web sites.
In Touch's Web site was eventually redesigned, and on 19 June, the site emerged with a large blue square blaring across its homepage announcing the big news: the formation of LINKDOTNET. In Touch's original homepage design appeared in two thin columns separated by the big blue box -- the merger has arrived.
But this is business, and soon In Touch will cease to exist as LINKDOTNET takes over, carrying out its ambitious local and regional expansion plans as part of OT. OT has been expanding across Africa, buying the African network Telecel and almost 30 per cent of the Pakistani mobile network. It also obtained operation licenses in several Arab countries and seems to have its eye on Asia.
After years of stagnation and government neglect, experts say that the merger and today's vigorous IT environment are signals of a new Internet era in Egypt. Mohamed El-Nawawi, who resigned as In Touch's chairman following the OT deal, is optimistic about the trend.
"Until October 1999, we [In Touch] and all those who were working in the communications sector were basically swimming against the tide," El-Nawawi told Al-Ahram Weekly. But all this changed following President Hosni Mubarak's "IT speech" last September and the formation of a Tele-Communication and Information Technology Ministry, which issued a national plan to boost the IT sector. The shift in policy "improved our position drastically," says El-Nawawi; "our revenues in the first quarter of this year alone outdid the total revenues of our competitor for last year."
The new environment also allowed In Touch to move quickly in several directions, introducing new services like the 900-Internet-access dial-up, which doesn't require an ISP subscription.
"The mere fact that we introduced this service via Egypt Telecom meant that the government body was prepared to share the revenues of this service with a private sector company. This is a significant shift in the mentality governing the communication sector," explained El-Nawawi.
The government, moreover, allowed In Touch to become a member of the UN-affiliated International Communication Union last December. Arab Governments had requested that only government bodies become members during the Union's 1998 Geneva meeting. In Touch was the first ISP to join.
"So all this meant that the new regulations -- or the government for that matter -- were pushing us forward," El-Nawawi added.
LINKDOTNET now controls more than 50 per cent of Egypt's Internet market; it commands an estimated 100,000 subscribers and maintains some 230 employees. It is the leader in terms of services and is considered the epitome of mobile-Internet technology -- the new language of tele-communications. "The word 'mobile' is a buzz word now," notes Nawawi, "The word 'Internet' comes before or after it -- but always next to it."
So how will this powerful venture utilise its new-found strength? LINKDOTNET chairman and CEO Khaled Bichara gave one hint: "We will be expanding our consulting business to governments, businesses and tele-communications providers in the region," he said.
So "regional" is now the keyword. Aside from providing wireless application protocol (WAP) service for the first private mobile network, MobiNil -- owned, incidentally, by OT -- observers, including El-Nawawi, predict that LINKDOTNET will begin introducing similar services across the region. "We are not going to wait for foreign investors to take over [in this field]," Bichara told the Weekly.
El-Nawawi also predicted that the venture could be the first ISP to list itself on the stock exchange. "In order for any given ISP to do so, it has to have a huge capital," El-Nawawi suggested. "I believe that In Touch has done very well so far, and if it continues to do so [under the merger], it will be ready for the stock market."
Although the local Internet market still has room for more companies, many believe that the majority of the existing 60 or 70 ISPs will eventually be forced out of business. "I don't think small-sized companies will be able to compete," maintains El-Nawawi. "I envisage the Internet market to be dominated by around seven or eight ISPs with thousands of subscribers and hundreds of employees," he said.
Bichara agreed, maintaining that "We didn't mean to [contribute] to closing down other small ISPs with the merger, of course," Bichara says. "But I'm sure they'll have to redefine and shape their companies, refocusing their niche in the market."
Private initiatives- 11 - 17 May 2000
Don't hold your breath- 11 - 17 May 2000
Dial XXX- 10 - 16 February 2000