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Telecom Egypt to pay $359 mn to offer mobile services | ASHARQ AL-AWSAT English Archive
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File photo of a telecommunications tower. (REUTERS/Rick Wilking)

File photo of a telecommunications tower. (REUTERS/Rick Wilking)

Cairo, Asharq Al-Awsat—Egypt’s sole fixed-line telephone services operator Telecom Egypt (TE) is to pay 2.5 billion Egyptian pounds (359 million US dollars) to acquire a unified telecoms license allowing it to offer mobile services in addition to its existing landline service, Minister of Communications and Information Technology Atef Helmi said in comments earlier this week.

Replying to a question from Asharq Al-Awsat at a news conference in Cairo on Wednesday, Helmi said: “We are currently working on completing all procedures related to the license to have it officially ratified three months from now.”

The move comes as Egyptians increasingly make use of cell phones instead of fixed-line services. Cell phone penetration in Egypt pierced the 100 percent mark in 2012, according to the latest figures provided by Egypt’s Ministry of Communications and Information Technology. The country’s almost 87 million people has nearly 93 million cell phones.

Egypt’s telecoms regulator originally said it would allow 80 percent government-owned TE to offer mobile services under a unified license in 2012, but the license had been plagued with delays.

TE will now be able to compete directly with the country’s three mobile operators: Mobinil, United Arab Emirates-based Etisalat’s Egypt subsidiary Etisalat Egypt and UK-based Vodafone’s Egypt subsidiary Vodafone Egypt—which is 45-percent owned by TE and which it must exit in a year if it applies for the license.

Under the new license regulations set by Egypt’s telecoms regulator, those operators may also apply for unified licenses, at a cost of 100 million pounds (14.3 million US dollars), allowing them to use TE’s landline network. In turn, TE will be able to use the three mobile operators’ existing mobile networks to offer its own mobile services. The license also allows TE to build its own infrastructure in future in order to eventually use its own network instead of piggybacking on those of the other operators.

Helmi said a nationally owned company that would construct and lease basic infrastructure services to be used by licensees of the new unified scheme was being established at a cost of 300 million pounds (43 million dollars), with all companies working in the sector making a contribution.

He told Asharq Al-Awsat that the unified licensing system aimed to remove obstacles in the sector, providing companies with the opportunity to offer the full roster of communications services and help “instill the principle of equality and opening the door to competition between companies.”

Speaking to Asharq Al-Awsat, Hisham El-Alayli, the head of the National Telecommunications Regulatory Authority, the body granting the licenses, called the new unified scheme “a revolution in the service of the customer and the service provider at the same time, where they could receive all communication services from one company, besides the fact that the level of service provided will be more advanced due to the development of the infrastructure.”

He added that the decision provided an opportunity for competition between companies in the sector to offer better services to customers, “enriching the telecoms sector in Egypt.”

He said a roadmap had been put in place to develop the telecoms sector in the country that consisted of three stages. The first comprised building the infrastructure in 2014/15 for the use of operators; building the nationally owned company to administer the scheme and lease out the infrastructure; the issuance of mobile licenses without mobile network frequencies—such as that being offered to TE—and offering landline licenses on the TE network, which the existing mobile operators would be able to apply for.

He added that the second stage, in 2015/16, would include the issuance of 4G licenses and frequencies, while the third and final stage, in 2017/18, would include “the unification of the articles of the licenses by unifying the organizational and financial obligations of the companies.”