Wednesday,18 July, 2018
Current issue | Issue 1313, (29 september - 5 October 2016)
Wednesday,18 July, 2018
Issue 1313, (29 september - 5 October 2016)

Ahram Weekly

4G turned down

The future of 4G mobile services in Egypt remains unclear after three local mobile network operators failed to bid for licenses, reports Nesma Nowar

Al-Ahram Weekly

Egypt’s three mobile operators, Vodafone Egypt, Orange Egypt, and Etisalat Misr, have all refused to buy the fourth-generation (4G) licences the government offered recently as part of a plan to reform the telecoms sector.

What the government now intends to do with the turned-down licenses is unclear. The National Telecoms Regulatory Authority (NTRA) previously said that it would consider auctioning the licences on the international market should the country's three existing mobile operators turn down the offer to acquire them.

Kuwaiti mobile operator Zain, China Telecom, Saudi Telecom and Lebara KSA have all expressed an interest in applying for the Egyptian 4G licenses.

The other option the NTRA is considering is to give Telecom Egypt (TE), the country's state-owned landline monopoly, an additional 4G spectrum.

TE acquired its 4G license last month for LE7.08 billion, half of it in dollars, and acquired 15 frequency bands and has reportedly submitted a bid formally to acquire the additional 4G spectrums available after the three mobile companies refused them. It will pay the balance of the payment in instalments over four years.

The NTRA will have a final say on what to do with the licenses at its upcoming meeting in early October, the regulator said in a statement.

The 4G licenses refer to new technology that transfers data at higher speeds than older technology because it treats data at the same speed as voice. The technology enables the user to display and transfer photographs and multimedia files including videos in a faster and clearer way.

Companies operating 4G networks can offer maximum speeds for data transmission that reach 100 megabytes per second for remote mobile communication users in cars and trains and one gigabyte per second with wi-max technology. 

In June, the NTRA informed all four telecoms companies in Egypt of the terms and conditions for acquiring the licenses. It said it targeted collecting a total of LE22.3 billion from license fees.

The rejection by the country’s mobile operators of the licenses comes on the heels of objections to the hefty license fee demanded by the NTRA and payment terms that require the operators to submit 50 per cent of the total in dollars and pay the entire amount upfront.

In a statement Orange Egypt said it had refused to bid for a license under the current conditions and that the company would revisit its decision should these conditions change.

The companies also expressed concerns over the range of frequencies offered, which are low compared to international standards and consequently may not enable them to offer complete 4G services.

Vodafone Egypt said it had not bid for a licence because the spectrum on offer neither allowed for operating 4G services effectively nor for faster Internet speeds.

"Vodafone Egypt confirms that it would be ready to acquire a 4G licence if the terms and conditions can be revised," it said in a statement.

According to the Groupe Speciale Mobile Association (GSMA), an industry group which represents the interests of mobile operators worldwide, the total amount of spectrum assigned to each operator for 4G needs to be in the range of 2x30 MHz to 2x60 MHz across a range of coverage and capacity bands, with a minimum contiguous bandwidth of 2x10 MHz in each band.

GSMA called for the authorities and the country’s mobile industry to work closely together to set up a roadmap for the successful introduction of 4G services in Egypt.

“There are some critical success factors that should be clarified before moving forward with 4G licensing in Egypt,” said John Giusti, GSMA chief regulatory officer.

“GSMA is concerned about sufficient spectrum being made available at fair, market-reflective prices to support fully-fledged 4G rollout. A clear spectrum roadmap is necessary to allow operators to understand how and when sufficient spectrum will be made available,” he added.

While resorting to an international auction is on the table, analysts said that the government and local mobile operators stood to gain more by resuming negotiations. "We expect further negotiations to take place, since these are in favour of all the parties involved," the Cairo-based Pharos Holding said in a note.

The investment bank said that maintaining a cooperative environment with the mobile operators was key to the successful launch of new mobile services requiring initial infrastructure sharing requirements, since disputes would set limitations to launching the services and pre-establishing their own infrastructure.

It added that it was in the operators’ favour for the NTRA not to offer the 4G licenses to international players, since this could dilute market share and profitability.

But while experts expect the resumption of the negotiations, one government official told the Al-Borsa newspaper this week that the NTRA was not going to open another round of negotiations with the mobile companies and that the operators would not have the right to object to the offering of the remaining frequencies to TE should the telecoms authority approve it.

Japan was the first country to introduce 4G technology in 2004, followed by Norway and Sweden in 2009 and the US in 2010.

Saudi Arabia and the UAE were the first Arab countries to use 4G in 2011. The technology had two million users in 2009, jumping to 1.1 billion in 2015.

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