Vodafone Egypt is working on reframing its frequency spectrum in preparation for offering the 4G licence. The company’s CEO, Stefano Gastaut, told Daily News Egypt that Vodafone is awaiting the approval of the National Telecommunications Regulatory Authority (NTRA) to inaugurate the service.
Gastaut said that the company is in negotiations with Telecom Egypt (TE) to sign a local roaming agreement.
How do you see the communications market in Egypt during the current period?
There are many changes happening now, including the flotation of the Egyptian pound and the important economic decisions taking place. Yet, this is a transition phase that will be followed by a general improvement in the economy. I took office three months ago, and during this period the market saw many changes, such as offering the 4G services, the flotation of the pound, and imposing value-added tax (VAT).
What about the company’s investments in the Egyptian market?
Since Vodafone entered the market, we have invested about EGP 35bn, including EGP 9bn in the past two years alone to develop the network and make it more 4G ready.
Over the coming period, we will continue to inject investments in the market, despite the current economic conditions. We did not change our investment policies, especially in terms of developing the network. Investing in 4G is not limited to paying a fee for the licence, as we have been developing our network for the past two years to be ready for when the service is enabled.
Successful companies do not invest when the stars align, but they invest in preparing to seize opportunities. Vodafone knew this technology would be coming sooner or later and worked to prepare to obtain the licence. This is the result now: we are 100% ready to launch the service and at the highest possible quality.
When will you launch the service?
The company is ready to provide the service now. We are currently awaiting the final approvals from NTRA. If we are given the green light tomorrow, we will launch it immediately. The company is capable of launching the service on the current spectrum and even before receiving the new 5 MHz through reframing the old spectrums.
The total frequencies available to us now are enough to provide the 4G service at the highest quality.
Will the re-framing process impact the service quality?
Re-framing the spectrum will have a positive impact on the service. It will also ease the burden on the 3G service.
What applications do you think will grow after launching 4G?
All applications related to education, entertainment, and videos are candidates for growing. Meanwhile, the enterprise sector will be among the winners, as 4G will help companies provide more efficient products and faster services.
If the NTRA offers more frequencies now, will you bid to obtain them?
The company is always keen to acquire more frequencies at reasonable prices. We may not need them now, but we want to improve our services for the future.
What about the company’s financial results in Egypt?
Vodafone Egypt has been making good results. There is a limited decline in Vodafone International results, but this was driven by the decline of results in India.
How are you facing the effects of floating the pound?
The flotation of the pound will have an impact on Egypt, and not only our sector. For us, we believe it will result in losses, considering the change in the foreign exchange rate in November, due to the contracts we signed before the flotation. Some of these contracts are denominated in US dollars, and their value doubled after the flotation.
Are you thinking about repricing your service?
We are not currently considering repricing our products in Egypt.
Do you think certain guarantees should be put in place in Egypt to safeguard competition after TE entered the mobile market?
TE became a mobile operator, while at the same time it owns the infrastructure of the communications sector. We work with TE as partners, just as all operators, in terms of infrastructure. Egypt is not unique in this regard, as this is the case in many countries around the world.
As for becoming a competitor, we welcome competition. This benefits consumers first hand. But frankly, it is no secret that there is a problem in being a competitor to Telecom Egypt when they own a 45% stake in Vodafone Egypt. We, however, are confident that the NTRA and the Ministry of Communications and Information Technology will find a governance scheme that takes the interest of all parties, Vodafone International and Telecom Egypt, into consideration.
Does the parent company have the right of first refusal if the government wanted to sell TE’s stake in Vodafone Egypt?
The partnership agreement includes a term that allows Vodafone International to buy TE’s stake in Vodafone Egypt if the government decides to sell this stake before offering it to a third party—also known as right of first refusal. TE also enjoys the same right if Vodafone International decides to exit the Egyptian market. We here, however, do not know if the mother company plans to make use this right or not.
What are the features of the company’s strategy in the coming period?
Vodafone’s strategy aims to have the best team possible. This is why we strive to continue being the number one company across all markets, both in terms of quality and number of subscribers. We want to offer our services to clients at the highest possible quality. Vodafone does not only provide voice and internet services, but rather enables its clients to do more, such as money transfer via mobile.
What is the outcome of the local roaming negotiations with TE?
We are still in negotiations about local roaming with TE, which is why the information remains classified for now. I can say that our negotiations are not limited to the agreement, but also touch on network capacities and quality, as well as the pricing of minutes. We have daily meetings with TE officials to tackle all fronts of the agreement.
NTRA serves as the regulator of the market to ensure it [the market] is free of monopolistic practices to preserve the rights of all companies alike.
Do you have a plan to expand in outsourcing to maximise your US dollar-denominated revenues?
The company will expand in outsourcing and international services. There is a plan to increase the Vodafone International services staff to 3,000 employees, being an important source of dollar-denominated revenues.
Are you currently building new network towers?
We have recently made a bid on a tender launched by NTRA to strengthen the network in the 1.5m feddans project area.
Do you view competition in ADSL to be fair?
The ADSL market is an important part of the services we provide. We plan to increase our market share of ADSL, but competition in that sector is complicated and difficult. We are not making profits off this sector as of now.