Egypt's telecom regulator to reap percentage of future TE mobile earnings

Ahram Online, Wednesday 16 Apr 2014

State-owned Telecom Egypt to pass on 6 percent of revenues from upcoming mobile services to governemnt agency, NTRA head tells Reuters on Wednesday

Telecom Egypt premises in Cairo (Photo: Mai Shaheen)

Egypt's telecom regulator revealed on Wednesday that it is set to reap 6 percent of fixed-line operator Telecom Egypt's (TE) revenues from mobile services once they are launched later this year.

National Telecommunications Regulatory Authority (NTRA) head Hisham El-Alayleyi told Reuters on Wednesday that TE would effectively be able to launch the new services within three months.

Earlier in April, Egypt's government announced it was ready to launch a much-anticipated and controversial "unified" license which would allow TE, which is 80 percent state-owned, to offer mobile services using mobile operators' existing infrastructure for a fee of LE2.5 billion.

In return, Egypt's three mobile operators, the Egyptian Company for Mobile Services (Mobinil), Vodafone Egypt, and Etisalat Misr, will be allowed to use TE infrastructure to offer landline services for a fee of LE100 million each, the government announced at a press conference in which representatives of all three mobile operators were absent.

Though the company has not yet released earnings estimates for its mobile services, TE has in past years been feeling the sting of a market increasingly oriented towards mobile services as a substitute for fixed-line communication.

The company's home voice revenue fell 17.6 percent in fiscal year 2013 and 17.3 percent during the previous year, as fixed-line subscribers went down from 6.24 million in 2012 to 5.72 million users in 2013.

Meanwhile, earnings contributions from Vodafone Egypt, in which TE has a 45 percent stake, increased to LE969 million in 2013 from LE876 million in 2012.

TE has been given a year to reconsider its stake in Vodafone in exchange for the right to offer its own mobile services, a move which would quell mobile operators' fears of unfair competition.

In a Q&A session held after the launch announcement earlier this month, Egypt's telecom and information technology minister Atef Helmy told reporters that TE could either sell its stake or buy out 100 percent of Vodafone Egypt in a "fair commercial transaction."

“The government’s problem with the status quo regarding TE’s stake in Vodafone Egypt is the conflict of interest, which would be solved either way,” Omar Maher, telecoms analyst at Cairo-based investment bank EFG-Hermes, told Ahram Online.

Mobinil and Etisalat have not released an official response to the license terms, though the latter’s statement that it was studying the terms and preparing a response indicates that contentions are far from over.

All three mobile operators have previously threatened to resort to international arbitration if the license is issued on terms that would allow TE to keep its Vodafone stake and not grant them the right to build their own fibre infrastructure.


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