A Telecom Egypt building is seen at the Smart Village in the outskirts of Cairo, Egypt, October 27, 2015 (Reuters)
Egypt's state-owned telephone company Telecom Egypt has signed a deal to buy a fourth-generation (4G) mobile licence, becoming the first mobile operator to do so in the country.
Egypt's telecom regulator is offering licences for the high-speed 4G mobile technology to the three companies currently offering mobile services -- Orange Egypt, Vodafone Egypt, and Etisalat -- as well as to Telecom Egypt (TE), which holds the landline monopoly.
The contract signing by the National Telecommunications Regulatory Authority (NTRA) and Telecom Egypt was announced at a press conference aired live on TV on Wednesday and attended by Communications and Information Technology Minister Yasser Al-Qadi.
Telecom Egypt said in a statement on the stock exchange website that the 15-year licence will cost the company EGP 7.08 billion, of which EGP 5.2 billion was paid in advance, half of which in dollars.
The Egyptian government says the introduction of the new technology aims to maximise revenues for the state coffers and improve the speed of services to mobile customers.
The landline monopoly owns a 45 percent stake in Vodafone Egypt but will now be able to provide mobile phone services itself within 6 months, following the introduction of mobile technology in Egypt.
The company says it is in advanced talks with a leading bank to provide an evergreen loan to fund almost half of the first payment for the licence.
The rest of the payment is to be paid in installements over four years, half of which has to be paid in dollars.
The company can pay EGP 2 billion to renew the licence for an extra five years when it runs out (after 15 years).
The other operators have until 22 September to pay required financial obligations and sign up for the licences, state news agency MENA said Wednesday.
In July, Al-Qadi said if any of the three operator did not apply for the new licence, it (the licence) will be offered to other non-Egyptian companies through bidding. He added at the time that Kuwait's leading mobile operator Zain had expressed interest.
Also, representatives from Saudi Telecom and Lebara KSA are in Egypt this week to discuss the possibility of obtaining the mobile phone new licence, Reuters reorted on Monday.
Egypt is selling 4G licences as part of a long-awaited scheme to reform the country’s telecoms sector. The government announced the plan to introduce the mocile technology in 2014 and said at the time that TE would be allowed to offer mobile services if sold its Vodafone stake within a year of offering the services.
But TE said Wednesday it had no legal obligation to do so.
The reforms will also allow Egypt's three mobile operators to offer fixed-line telephone services for the first time.
Al-Qadi said in June the government hopes to collect a total of EGP 22.3 billion ($2.5 billion) in licence fees.
*The official exchange rate for $1 = EGP 8.78