Official: TE interests are a factor but not everything in delay in offering international calling licenses
CAIRO: National Telecommunication Regulatory Authority (NTRA) Vice President Sherif Ginena denied Sunday a news report of plans to postpone the offering of two international calling licenses from the fourth quarter of this year to the first quarter of next year.
NTRA Executive President Amr Badawi announced last week that the long-awaited offerings are to be made by the end of November, but at least one news report since then has cited an unidentified Ministry of Communication and Information Technology (MCIT) source as saying the ministry plans to postpone the offering.
It s a political decision, but we re ready to go at any time, Ginena says. We re waiting for the minister s decision as well as the decision of the NTRA president. It all depends on market conditions and timing. The timing is important because we want to maximize the value of these licenses.
The unidentified MCIT official had earlier told Noozz the ministry would likely postpone the offering of the International Gateway licenses to allow 80 percent state-owned Telecom Egypt (TE) more time to prepare for the loss of its monopoly on international calls. TE s monopoly ended legally in December 2005 and the NTRA has promised the release of the two international licenses as early as January 2006.
Offering the licenses is mainly aimed at attracting both local and international investments into the communication industry, the MCIT official was quoted as saying by Noozz. But this should not affect the interests of the market operators, especially those of Telecom Egypt.
International calling has, in recent years, accounted for more than 25 percent of TE s annual revenues. The company collected LE 2.3 billion in international calling revenues, or 27 percent of total revenues of LE 8.5 billion in 2005. International calling revenues include incoming international calling fees, mobile international traffic via its 25 percent share in VFE and fixed international calling traffic via its network.
Ginena says the NTRA considers TE s interests a factor in the timing of the expected offering, but it s not everything. He stresses no definite time has been set by either the NTRA or MCIT, despite Badawi s announcement last week.
As of press time, Badawi was not available for comment.
I don t think international calling competition will hurt TE that much, says EFG Senior Analyst Wael Ziada. There s going to be an impact, there s going to be a drop, but it s not what people are expecting. On the other hand broadband revenues are growing, so they have other avenues to make up for lost income.
Already in 2006, TE expects lower international calling revenues due to the development of other communication mediums such VOIP, says Ziada. But the company s expansion into the broadband market as well as the acquisition of 49 percent of Vodafone Egypt opens new revenue opportunities, he adds.
To counter the effects of losing its monopoly on providing the service, TE has recently undertaken several measures including increasing its stake in VFE to 49 percent via a stock market buyout and offering discounts ranging from 6 to 12 percent on international bills from LE 3,000 to LE 6,000.
I think we re going to be in a good position to compete, says TE Chairman Okail Bashir. We ve already started lowering our rates and we should be able to make up for lost [international calling] revenues by continuing to broaden our customer base and leasing parts of our infrastructure.
New international calling operators will likely be required to lease TE facilities until at least the end of 2008, according to NTRA sources. At least two companies have so far made clear their intentions to bid on the international calling operator s licenses once they are offered: VFE and new third mobile operator Etisalat.
