Egypt’s communication and information technology sectors are set to witness a leap starting the next couple of months as Minister Atef Helmy pushes forth with projects that were stalled by dragging political turmoil.
Minister Helmy spoke to the Daily News Egypt about his plans to increase investment prospects in the sector and open the door for more competition. He also highlighted his forecasts for the current fiscal year.
What’s the latest with the integrated license issuance? And what are the revenues expected?
We are in the closing stages of finalizing all matters related to the integrated license. We have announced the integrated licenses in December and started working on it the following month. As procedures unfolded, we came across a number of issues that were lingering for years, and it was essential that we dealt with them before moving forward. After all, we are ahead of a step that will broaden the communication sector in Egypt, and we needed to be on the right path and also maintain international credibility.
These issues at hand were extremely sensitive that international and regional parties intervened. It was of paramount importance that we strike a balance between all involved parties: Egypt Telecom and mobile phone providers. Its undoubted that the idea of an integrated license did not suit the taste of some, which added all the more to the delay.
What I can fully confirm is that we have gained the respect of all involved parties, and maintained our credibility, both regionally and internationally in handling this matter.
As for the returns, it is still too early to discuss figures.
It is also very important to make one thing clear, which is that we’re seeking to erode the notion that the communication sector, especially voice services, is limited which makes the competition tighter. This is why we are currently working on widening the horizons and introducing new communication services to allow for more room for positive competition.
This is why we have introduced services such as transferring money to bank accounts via mobile phones, as well as AVL services. We are also looking forward to the establishing of the broadband infrastructure, which would enable the reach of more services to schools, health, research centers and judiciary systems. All this will inevitably mean more fields for competition between companies, from which the regular citizen would benefit.
In previous comments, you have said that you aim for the issuance of this license before year end. Is this deadline still valid?
Yes, we are working towards getting it done within this period.
What are the ministry’s goals for 2014? And has its vision changed following 30 June?
The vision has not changed as we work in an institutional manner and the goals are fixed. There may come changes in tactics or priorities in light of overall changes, but that doesn’t alter the overall strategy. I assure you that the strategy that was agreed upon will be the same this year and for the coming 3 years. It’s a very ambitious plan for an extremely promising sector. The challenges have definitely increased due to political disruptions, but starting September we are determined to keep foreign investments, and increase them, as well as boost the market.
For instance, on 11 April we announced a EGP 20m stimulus package targeting micro and small business which was activated in June and beneficiaries reached 174 firms.
We have also launched a number of informatics and infrastructure projects.
We also persist in solving the problems of companies operating in the market, and also pursue solving problems of frequencies and have launched the money transfer services via mobile and AVL, In the coming weeks, the pilot project will be launched for Broadband.
What are the investment prospects available for foreign investors?
We have recently visited Saudi Arabia and the United Arab Emirates and met international firms, all within the context of maintaining existing investments and attracting new ones. We have witnessed the signing of a partnership agreement between Vodafone xone Egypt and Dubai-based Seed Group to help Egyptian technology start-ups get access to the UAE markets. IBM and Microsoft will announce new investments and developments in the coming days. All these accomplishments depict that this is a very attractive and promising sector because we have a competitive edge in terms of the human element and infrastructure. We have also recently launched the Maadi Technology Park, which is a great addition. There is an unlimited support from the government to create an attractive environment for regional and international investments and meet the demands of companies in this regard.
We will be visiting Saudi again from 15 to 16 December, and are working with the chambers of commerce there and will get in touch with international companies. Following our last visit, a Saudi investor has expressed interest in the Maadi Technological Park.
Egypt will soon be hosting Cairo ICT in December. What are the preparations for this event?
Cairo ICT this year will be a message of reassurance to the world that Egypt, represented by its telecommunication and information technology sectors, is capable of organizing conferences and exhibitions at the highest level. We are calling on the Arab and Africans brothers, and global companies, to be present at the event. Which brings me to mention that during my visit to the UAE, we communicated with Egyptian executive leadership working in the corporate world and arranged for them to participate in workshops that are to take place during Cairo ICT. We [Egypt] have executives in companies such as Microsoft, Google and IBM, in addition to a communications expert also present in the Gulf region who invited also to this workshop.
What is the size of foreign investments the ministry is targeting in the next period in 2014?
Let me first tell you that the growth we achieved last year was 6%, and we are targeting 10% this year. I have also targeted the creation of 50,000 direct and indirect job opportunities during the year. Despite the difficulties faced in the first quarter, we have succeeded in creating about 9,000 job opportunities, either direct and indirect. We are on track.
Last year, the communication and information technology’s contribution in the gross domestic product last year was 3.2%. This year, we are aiming for 4.1%.
Moreover, we were forecasting a size of investments in the sector to reach EGP 24bn this year, whether by government or foreign investments. However, to be realistic and honest, and following the political challenges that prevailed during the first quarter, this figure is currently being revised. This figure may come down to about EGP 20bn. It is a very positive figure. The government’s share in financing this will be around 10% to 15%.
Has there been any agreement on a certain figure for Emirati investments in the sector during the past visit?
No there isn’t. There has been general discussions. It is essential to point out that the UAE was initially considering grants, while we were addressing joint investments. The Egyptian technology sector is a very bright sector with countless promising prospects and therefore it offers win-win situations. Accordingly, the sector is not part of the UAE’s package of grants to be given to Egypt. What we seek is investments with the UAE, through Etisalat, being the technology investment arm of the country in Egypt.
We have only discussed the outline of projects and investments that can reach a value of EGP 2bn.
What is the latest with regards to high speed internet, or broadband?
The network’s first pilot will reach 1,062 school, 896 youth centres, 350 hospitals, and 75 research centres. The project was to be launched last September, but was delayed, Service Level Awareness has to be achieved first. The project’s launch could not happen without the ministries involved - education, health, youth and research – being willing to keep it running.
The first phase, which will take about 3 years, rather than 2 years as previously set, will have a value of about $2.4bn, or about EGP 17bn, of which the government’s share is about 15%.