Can you hear us now? Egypt mobile carriers struggle with politics

Ahmed Feteha, Saturday 6 Aug 2011

Condemned for shutting down communications during the January 25 Revolution, Egypt's main telecom companies have been struggling with PR problems ever since

A cartoon mirroring public anger towards mobile providers (Courtesy of Carlos Latuff)

While the number of mobile phone subscribers has grown by almost one third in 2011 over 2010, mobile carriers have faced one problem after another following the January 25 Revolution.

The two largest carriers, Vodafone and Mobinil, (with market shares of 42.2 per cent and 39.1 respectively) are receiving the harshest blows as politics unexpectedly crept into their daily business.

Vodafone, on the one hand, has been going through seemingly never-ending waves of public censure and condemnation as their publicity endeavours seem to continuously malfunction.

Their latest blunder was the “Shokran” or “Thank You” campaign launched in Ramadan which suddenly turned into a parody of the company on social media, thanking Vodafone for shutting down mobile services on 28 January, leaving victims of the violent clashes of the day unable to call for help.

Earlier in June, Vodafone faced another anger backlash on the release of an advertisement that suggests the international mobile carrier contributed to the Egyptian uprising that led to the ouster of former president Hosni Mubarak in February.

Now Vodafone has its own highly active #hatevodafoneeg hashtag on Twitter as well as a dedicated hate website featuring various articles, commentary as well as artwork, all devoted to abhorrence and ridicule of the company.

Mobinil, the oldest provider in the market, has been embattled by an Islamist-led boycott against the firm on the back of accusations leveled against founder Naguib Sawaris of mocking Islam after tweeting a cartoon of Mickey and Minnie Mouse dressed in full veil. 

Tens of thousands of angered Egyptians took to social media vowing to “break the sim card” in condemnation of what many of them received as a Coptic attack on Islam, given Sawiris’s religion.

Egypt's traditionally the largest mobile provider by subscriptions, 30.54 million during second quarter 2011, said last week it expects its third quarter results to show the impact of losing "hundreds of thousands of subscribers".

“There is an unfortunate mixing of politics, religion and business in Egypt," Hassan Kabbany, Mobinil’s chief executive, told Ahram Online over the phone. "People should know that Mobinil is a business that doesn't get involved in the first two arenas."

Mobinil’s bottomline has been tumbling in 2011, reporting first half losses of LE86 million, which the company attributes to political turmoil, economic uncertainty along with sizable tax payments.

Etisalat Egypt, the newest entrant to the Egyptian Market, has had a relatively smoother post revolution sail; receiving much less criticism than its two other competitors, although it had also shut down its service in January.

The UAE subsidiary might have flown under the radar of public apprehension due to its smaller market share of around 18 per cent.

Users who shift either from Vodafone or Mobinil are more likely to choose Etisalat, as it offers cheaper rates” says Amr El-Alfi, co-head of research at CI Capital.

El-Alfi sees that Etisalat Egypt is currently more appealing to users as it is surrounded by less controversy, being an Arab owned company, compared to multinational (foreign) companies.

He estimated that 6 out of each 10 users leaving Mobinil prefer to shift to Etisalat.

To overcome the hard times, the three operators have launched generous promotional campaigns during Ramadan. “The market is already facing hard times with the fierce price competition between providers, shrinking profit margins, and a close to saturation customer base” El-Alfi comments.

"Further boycotts will add to the market’s struggles," concludes El-Alfy.

The mobile market has been growing rapidly over past few years. Gross mobile subscriptions on the national level grew to 74.77 million accounts in May 2011, up from 58.25 million a year earlier, which translates into a 93.2 per cent saturation rate.

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