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Mobinil expected to see profitability in 2015 and plans to invest EGP 2.5bn in the coming year: Managing director

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Mobinil Managing Director Ive Gotieh stressed the need to settle all monetary disputes with Telecom Egypt before the latter will provide mobile services. Gotieh stresses that this action will help to maintain “fair competition in the domestic market.”

Mobinil Managing Director Ive Gotieh expects to see profits in 2015 after incurring losses for three consecutive years. (Alborsa photo)

Mobinil Managing Director Ive Gotieh expects to see profits in 2015 after incurring losses for three consecutive years.
(Alborsa photo)

By: Aisha Zidan

Mobinil expects to see profits in 2015 after incurring losses for three consecutive years. Next year, the company will target activities to providing further non-audio mobile services, attaining the right to provide international calls and services in addition to extending their fiber optics networks in the domestic market.

Mobinil Managing Director Yves Gauthier stressed the need to settle all monetary disputes with Telecom Egypt before the latter will provide mobile services. Gauthier stresses that this action will help to maintain “fair competition in the domestic market.”

“Next year, the company will focus on non-audio mobile services to increase revenues,” Gauthier said. “Mobinil seeks to expand its internet services and the automatic car tracking through the use of video display services.”

Gauthier confirmed that the use of smartphones reached 20% in Egypt, while in Europe the use of smartphones exceeded 95%. Gauthier believes this demonstrates the possibility of promising growth in the domestic market. The chairman also referred to the current 100% increase in mobile usage.

“Five years ago, customers used mobile phones just for audio calls, while now 50% of mobile use is in the area of for non-audio services,” Gauthier added.

“The real growth in providing non-audio services is related to an increasing population  of mobile users,” according to Gauthier.

Figures from the Ministry of Telecom indicate the net mobile customers reached by the three major mobile companies totaled an increase of 120,000, amounting to 96.89 million users compared to 96.77 million at the end of June, constituting an increase of only 0.1%.

Gauthier went on to assert that Mobinil’s annual investments have been made despite the Egyptian political situation, concluding the impact was sluggish due to currency depreciation, especially concerning the US/EGP exchange rate.

“Mobinil invests EGP 2.5bn annually, a figure which is always rising. Investment costs in internet services compared to fixed-line telephones are decreasing,” Gauthier explained.

He mentioned that the company’s investments in the coming year would be similar to the current year, exceeding EGP 2.5bn. Gauthier explained the losses of the past three years on two causes; firstly, the rise in the company’s borrowing interest rates, while the second is the accelerating depreciation due to the renewal of company assets.

Gauthier expected Mobinil to maintain profitability in 2015 through a decrease in the company’s deprecation costs.

Mobinil figures show the Company incurred net losses of EGP 447.2m during the first nine months of 2013, compared to EGP 94m during the same period last year. The company increased its revenues to EGP 7.8bn compared to EGP 7.7bn for the same period in 2012 an increase of 1.8%.

“Mobinil’s outlook for the telecommunication sector in Egypt depends on the administrative environment and the investment climate,” Gauthier said, “which should allow for fair competition, and transparent procedures in transactions and the granting of licenses.”

“Opening the door for Mobinil to build an international calls network, besides extending fiber optics cables in order to assist in the organisation of the Egyptian telecommunication market,” would “end Telecom’s Egypt monopoly over these services.”

Gauthier asserted the company’s right to establish an international call network, but currently, he said, “the situation is much more complex” as the company has yet to receive the necessary approval from the National Authority for Telecommunication Regulation to establish such a network.

Etisalat Egypt is the only mobile company with a license for international calls, and according to the National Telecom Regulatory Authority, a down payment has to meet mobile customers’ demand. It is estimated to cost the company EGP 100 for each mobile customer. Mobinil customers totalled 33.5m by the end of July, which would imply a cost of tens of billions in order to gain the required licence.

This value is to be paid once during the process of granting licenses. Furthermore, EGP 20 is to be paid at the start of each year for each new customer added to the mobile service’s customers’ database.

Gauthier, when questioned regarding the disputes between Mobinil and Telecom Egypt, stated that “the current disputes are in front of judicial authorities and are awaiting their decisions,” indicating that the negotiations to settle these disputes “are ongoing, but remain unresolved.”

Gauthier stressed the importance of settling these disputes before Telecom Egypt launches its mobile services in Egypt, pointing out that the unified license cannot be issued without first resolving the financial disputes between the companies.

The chairman added that Telecom Egypt’s leasing of networks and frequencies to mobile operators in an equitable manner guarantees fair competition between all parties’ and will further support the government’s plan to re-regulate the telecommunications market.

Gotieh clarified “the company will fight for an integrated licence which will allow telecommunications operators to compete fairly,” adding that the Minister of Telecommunications also supports this goal.

However, Gauthier indicated that international arbitration may be the best means to settle this dispute should the ministry fail to grant a unified license.

Gauthier mentioned that Mobinil seeks to provide 4G services, following approval from the Egyptian authorities. Such an initiative would require raising company’s current frequencie by at least 50 MHz.

“Mobinil concentrates on enhancing the quality of its services to clients,” according to Gauthier. He further added that the National Telecommunications Regulatory Authority reports found Mobinil to be “the best operator,” for quality mobile services for two consecutive years. Gotieh points out that concerns allegations of poor quality on the network are usually the result of external factors such as the thickness of walls.

The chairman announced that Mobinil is currently conducting negotiations with several Egyptian banks to borrow funds with the goal of renewing and expanding their network.

Concerning the improvement of networks in Sinai, Gauthier emphasised that the situation differs in these regions since establishing a “signal-strengthening” station in the area requires the approval of several sovereign authorities including the armed forces and “concerns issues of national security.”

He highlighted the controversy over the authorities’ request to enhance the area of coverage while simultaneously refusing to grant the required approvals for establishing signal-strengthening stations.

Gauthier revealed that Mobinil spent nearly 75% of its 2013 investment in strengthening its mobile network, accounting for nearly EGP 2bn. He also pointed out Mobinil’s participation in Ministry of Telecommunication auction to establish signal-strengthening stations in Sinai in which all companies have the right to compete.

Gauthier is optimistic about “new applications” to be presented at  Cairo’s 2013 ICT conference and exhibition, he anticipates that this “will be a surprise for all competitors.”

The chairman emphasized that Mobinil has nothing to do with “spying on political figures” which he confirms “is a governmental issue.” However he asserts that, “Mobinil maintains the confidentiality of the client’s data and information and does not allow tapping of calls”.

Gauthier denied Mobinil receiving any order from the Government of former president Mohamed Morsi or any other “sovereign Egyptian authority” to intervene in service provided to clients. He further denied allegations of participating in the dissemination of anti-government SMSs, asserting that since he has assumed the role as Mobinil’s managing director, he has “not received any order to stop or disrupt the service.”

In regards to social responsibility, Gauthier indicates that Mobinil will continue its initiative to train 100,000 Egyptians to work in various sectors of the Egyptian market. Gauthier added that Mobinil focuses on three main objectives; first employment, second is health and third education. In furtherance of these goals, Gauthier points out that Mobinil spent large sums during 2013.

Mobinil’s ownership structure is distributed as 1% for stock exchange free trade, 5% for Orasocm Telecommunication and 94% for Orange French Company.

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