Telecom Egypt (TE) has secured a licence to provide fifth-generation (5G) mobile phone services from the National Telecommunications Regulatory Authority (NTRA).

The licence is valued at $150 million and runs for a non-renewable period of 15 years. It was initially anticipated to be worth $500 million.

TE’s acquisition of the 5G licence aligns with the government’s commitment to making advanced technologies accessible to both institutions and individuals through Egypt-based companies. 

“The deployment of fifth-generation technologies will contribute to digital transformation across various sectors, thereby positively impacting the national economy and enhancing Egypt’s standing in global communications and information technology indicators,” said Amr Talaat, the minister of communications, at the agreement signing event.

5G networks bring high-speed capabilities to telecoms users, fostering innovation and development across various applications. They also enable the control of numerous devices simultaneously, a pivotal capability for revolutionary applications in smart cities and for healthcare services and other advanced applications. 

Amr Alalfi, head of equity strategies at Thundr Securities, said that the value of the licence is reasonable at $10 million on an annual basis. He noted that the expected return for TE will take at least six months to materialise. 

Alalfi anticipates that securing the fifth-generation licence will lead to an increase in the company’s subscriber base and generate additional revenues from the services provided on fifth-generation networks. 

He expects TE subscribers to increase in number with the introduction of 5G services. The company’s revenues will also grow, he said.

An Ericsson Mobility Report released in November 2023 anticipated a 41 per cent growth in global 5G network subscriptions from 44 million in 2023 to 350 million in 2029. 

Media reports have cited sources from other mobile network operators complaining about the high price of the 5G licence in Egypt. They said that the economic feasibility of 5G technology in Egypt is in question, especially given the difficulty of importing mobile phones supporting the technology. 

Only eight per cent of locally available mobile phone devices in Egypt can support 5G, making the licence’s value challenging for investors and operating companies.

Alalfi said that competing mobile companies expressing reservations about the high price of the licence could have negotiated with the NTRA to acquire it at a lower price. Egypt has four mobile phone network operators: TE, which is state-owned and is the sole provider of fixed-line services nationwide; Orange; Vodafone Egypt; and Etisalat Misr.

The 5G licence will be beneficial in the expansion of the Internet of Things services and in enhancing Internet speeds, said Alalfi, expecting that 5G services may initially roll out in certain residential compounds.

Ahmed Al-Sherbini, a former assistant to the minister of communications and a former member of the NTRA Board of Directors, said that the operation of the 5G network will necessitate fresh investment and infrastructure upgrades on the part of companies and the Ministry of Communication. 

5G services could be provided as a nationwide network or as private networks for large enterprises, he added. Company profits will be determined according to the 5G applications offered, he said.

Hisham Al-Alayli, former head of the NTRA, said the new technology will bring the most benefits in the industrial sector, for self-driving cars, and in remote surgical operations in the medical field.

* A version of this article appears in print in the 25 January, 2024 edition of Al-Ahram Weekly