By Mohamed Alaa El-Din
Telecom Egypt (TE) may be forced to give up revenues estimated at EGP 20bn over the next five years, in case it acquires the 4G mobile licence. That is due to the stipulated licence regulations regarding giving up its share in Vodafone Egypt, in order to turn it into integrated operator. A number of officials expressed optimism about proposing the 4G licence, as it stands as a new service for the market, which would lead to pumping investments by the service providers.
According to Hamdy El-Leithy, Member of the Board of Directors at the Chamber of Information Technology and Telecommunications, proposing the 4G licence in the next year will have a positive impact on the communications market. Adding a new service to the sector would lead to increased investments in the sector, especially that the three present service providers, Vodafone, Mobinil, and Etisalat, are eager to provide the 4G services.
Hamdy added that the 4G licence will be proposed through bidding, which will allow achieving the highest economic benefit to the state. At the same time, it will give TE the chance to provide the mobile services through advanced technology, which will grant it a competitive advantage in front of the other companies. Moreover, TE can make use of the current period, until the new licence is issued, to get ready for providing the service, and qualify its personnel for that aim.
The Ministry of Communications and Information Technology issued an official statement last week, after the meeting held between its minister, Khaled Negm, and Prime Minister Ibrahim Mehleb. The statement asserted that the ministry is studying cooperation with the company’s board of directors, and the National Telecommunication Regulatory Authority (NTRA), the mechanisms needed for TE to acquire the licence to provide the 4G mobile communication services. This would also affect the company’s ability to work as an integrated operator. It is expected to finish these studies and grant the licence to the company during 2016.
For his part, a former TE official, who requested anonymity, said that proposing the 4G licence will lead to competition between several companies over its acquisition. Moreover, it will allow TE to ally with other experienced companies in the sector to acquire the 4G licence. This would be in addition to its potential to contribute to increasing competitiveness between all the operators in the market.
The official added that TE has to study well the decision of providing the 4G services. In case it takes that step, it will give up revenues estimated at EGP 20bn over the next five years. TE’s share in Vodafone Egypt makes annual revenues of around EGP 1bn, where the government company owns 45% out of Vodafone Egypt. As for the revenues of renting the international portal and the infrastructure to both Vodafone and Mobinil, they register approximately EGP 3bn annually, due to the contracts and agreements conducted by the two parties in 2014.
In case TE acquires the 4G licence in the next year, the company will be divided into two parts: one for providing the services of infrastructure and renting them; and the other company will be for providing the integrated communication services, internet, mobile, and land line.