Saturday,16 December, 2017
Current issue | Issue 1135, 14 - 20 February
Saturday,16 December, 2017
Issue 1135, 14 - 20 February

Ahram Weekly

TE going mobile

Telecom Egypt is expected to become the country’s fourth mobile network operator, reports Ahmed Kotb

Mobiles
Mobiles
Al-Ahram Weekly

The market is getting ready for the entry of another mobile network operator, with Amr Badawi, CEO of the National Telecommunications Regulatory Authority (NTRA), announcing this week that the Authority had issued a tender to hire a global expertise house to price the country’s integrated telecom licences that include mobile and Internet services, international gateways, and infrastructure.
According to the new licence to be granted, landline operator Telecom Egypt (TE) will be given the right to provide mobile telephone services. Additionally, the three existing local mobile operators, Vodafone Egypt, Etisalat Misr and Mobinil, will be allowed to offer fixed landline services.
However, the reason for a fourth mobile services operator is not clear, according to Sarah Shabayek, telecommunications analyst at CI Capital Holding. “The market is very mature, and penetration stands at around 120 per cent,” she said.
Even if the under-10 and over-75 age groups are omitted, most of whom are believed not to use mobile phones, the market penetration rate is still anywhere from 90 to 95 per cent, Shabayek said. “The market is reaching saturation, and growth has already slowed down.”
About 90 million SIM cards are now estimated to be working in the Egyptian market, with many people having more than one SIM card.  
In such circumstances, TE was the only company that could benefit from entering the mobile services sector, Shabayek said. “The fixed landline phone market has been slowing down for the last couple of years, and the company’s monopoly over the international gateway might be compromised if the existing mobile operators eventually get licences to establish their own,” she said.
The three mobile operators currently pay TE to use its international gateway, which generates 30 per cent of the company’s income.
Shabayek said that the NTRA would not grant the existing mobile operators a licence to build their own international gateways for two years in order to give TE a chance to cement its foothold in the mobile services market.
TE already has a 45 per cent share in Vodafone Egypt. It is not yet clear how that share will change after the company starts operations as a full telecoms operator with mobile services.
According to a report by the Oxford Business Group (OBG), if TE is awarded the new licence, competition in the mobiles sector, already tough, would be likely to increase.
The report stated that the average price per minute in Egypt is already the lowest in the Middle East, leading average revenue per user (ARPU) to go below LE30 ($4.9). OBG cited Vodafone as an example, with the highest ARPU of the three current mobile operators, saying it had reported LE26.1 ($4.26) ARPU in the third quarter of 2012.
Khaled Hegazi, Vodafone Egypt’s director of external relations, was quoted by the Al-Arabiya news Website as saying that the investment climate in Egypt was not ready for a fourth operator and that investment costs would be very high.
He also said that the situation was different in 2006, when the third mobile services operator was getting ready to enter the market. The penetration rate then was about 40 per cent, he said.
Once it has entered the market for mobile services, TE will not build up its own network infrastructure. Instead, it will use that of the three existing operators, saving a huge amount of money.
However, TE has announced that it will establish its own network with the advent of fourth-generation mobile services in Egypt, expected by the beginning of 2014.
For TE, the market is apparently nowhere near saturation, and the company requested a licence for mobile services more than three years ago, which has since been awaiting NTRA approval.
Now that the NTRA has announced there will be no more delay in granting a licence, operations are expected to begin in the second quarter of this year.
Mohamed Al-Nawawi, chief executive officer of TE, announced recently that the Egyptian market was full of potential because young people accounted for the majority of subscribers and their numbers were increasing steadily.
About 65 per cent of the market is composed of people under the age of 20, he said.
Al-Nawawi also said that the number of new households was estimated at 300,000 annually, thus attracting many potential clients who might be looking for a package of services including landlines and mobiles.
Shabayek agreed that TE would have an advantage in providing mixed services, both landline and mobile, which might allow for it to distinguish its promotions and attract clients.
The company has announced that it will be ready to offer mobile services within six weeks of acquiring the network licence and that it has already designed four innovative communication bundles.
Egypt’s Ministry of Communications and Information Technology announced last December that the telecoms sector currently had an investment volume of LE40 billion.
However, the sector’s growth has slowed down over the past two years, growing at 5.6 per cent, compared to the 18 per cent in 2010, according to ministry figures.

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