Egypt’s government announced the approval and details of a controversial unified license for the telecommunications sector Wednesday despite the absence of the country's three mobile operators.
The unified license will give mostly state-owned Telecom Egypt (TE) the right to provide its own mobile services in exchange for a LE2.5 billion fee.
In return, the unified license will allow Egypt’s three privately-owned mobile operators, the Egyptian Company for Mobile Services (Mobinil), Vodafone Egypt, and Etisalat Misr, to build a virtual network to provide landline services, using Telecom Egypt’s existing fixed network, for a fee of LE100 million for each company.
In addition, the license offers building and renting infrastructure for a fee of LE300 million.
In a press conference presentation, Minister of Communications Atef Helmy said that disputes have been resolved and that the final form of the license responds to mobile operators' demands, which he did not elaborate.
However, the absence of mobile operator chairmen from the press conference, that was already postponed once to insure their attendance, raised doubts — something Helmy responded to by assuring their attendance later on in a celebratory ceremony for the license approval.
“The issuance of the license does not end mobile operators’ reservations on it,” Mostafa Farag, telecommunications analyst at Mubasher Financial Services, told Ahram Online in a phone interview.
The final form of the license does not give Telecom Egypt the right to use its own frequency, confirmed Helmy.
“This means that TE will be able to offer call services along with 2G and 3G service by renting frequency from existing mobile operators. Those operators will be obliged to offer their frequency to TE so long as they have the extra capacity for it,” said Farag.
“The frequency spectrum is a limited national resource that we have to make the best use of,” explained Hisham Al-Alayeli, chairman of the National Telecommunications Regulatory Authority (NTRA).
Under Telecom Law No 10/2003, NTRA oversees the planning and management of all affairs related to radio spectrum resources on the national level.
NTRA allocates 25 services over frequency bands ranging from 8.3 kHz to 300 GHz, revised every four years to be aligned to the latest international regulations.
Mobile operators have been concerned to build their own infrastructure, as well as secure the right to acquire international gateway licenses, said Farag.
The government’s plan includes the establishment of a new entity responsible for updating the current infrastructure. Mobile operators will be allowed to contribute to the new entity.
“A maximum limit for mobile services companies has not been specified, but the state will be in control of the entity,” Al-Alayeli told Ahram Online on the side of the press conference.
Al-Alayeli also said that mobile operators will be allowed to build infrastructure using copper wires.
However, in a previous interview with Ahram Online, Omar Maher, a telecommunications analyst at the Cairo-based investment bank EFG Hermes, said that what mobile operators are interested in is to build their own fibre infrastructure.
Currently, TE and Etisalat Misr are the only two telecommunications companies with an international gateway license.
Mobinil and Vodafone rely on TE for their international traffic.
“Both companies will now be able to pay a fee in exchange for acquiring the international gateway license,” said Al-Alayeli.
TE has been offering wholesale discount prices to Mobinil and Vodafone to use its international gateway, to the extent that it has lowered its own profitability margins, Maher said.
Conflict of interest
Vodafone Egypt is a joint venture between TE, which has a 45 percent stake in the company, and Vodafone Group which owns the majority of its shares.
Hence, a license for TE to offer mobile services, while having a considerable stake in a competitor, would result in a conflict of interests.
In response to these reservations, NTRA required TE to exit from Vodafone Egypt within a year.
However, Helmy said in the press conference that TE can either exit or acquire Vodafone Egypt, as long as it is a fair commercial transaction.