Etisalat Chairman: company has already reached preliminary agreement with government for one of two licenses to be offered
CAIRO: Two International Gateway Licenses will either be sold to current telecommunications operators or through an auction in January, Minister of Communication and Information Technology (MCIT) Tarek Kamel told reporters Tuesday on the sidelines of the Cairo Investment Forum.
Kamel declined to comment on how much MCIT has valued each license at. His statements are the latest, and most senior, among many made by MCIT and National Telecommunications Regulatory Authority (NTRA) officials throughout 2006 concerning the timing of liberalizing the international calling sector long monopolized by Telecom Egypt (TE).
On another front, Etisalat Egypt Chairman Mohamed Omran, also present at the conference, said his company has come to a preliminary agreement with MCIT on the acquisition of an international calling license. He added his company has already imported most of the equipment necessary to operate international calls and will be ready to make the service available with Etisalat s 011 network launch in February.
TE s international calling monopoly ended legally in Dec., 2005 and the NTRA has promised the release of the two international licenses as early as of Jan., 2006. Still, the offering was never made as critics charged the 80 percent government-owned company continued to enjoy official protection.
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.
NTRA Vice President Sherif Genina says the NTRA considers TE s interests a factor in the timing of the expected offering, but it s not everything. He attributed the continued delays in offering to the authority s focus on ensuring market readiness and maximizing the value of the licenses to be offered.
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 in October and offering discounts ranging from 6 to 12 percent on international bills from LE 3,000 to LE 6,000.
Vodafone Group has since increased its stake in VFE to 55 percent through a capital increase, bringing TE s share down to 45 percent. The agreement effectively ended Vodafone s pursuit of an international calling license and launched a strategic partnership to offer more diversified services between both companies.
Despite talk of government protectionism, EFG-Hermes Senior Analyst Wael Ziada says its unlikely TE will be significantly affected by the imminent liberalization of the service, considering the steps taken by the company over the past year and rapid market evolution. Already in 2006, TE expects lower international calling revenues due to the development of other communication mediums such VOIP, he adds.
I don t think international calling competition will hurt TE that much, Ziada says. 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.
Even though international calling licenses have yet to be released by the NTRA, and despite Omran s announcement of his company s purchase of the necessary operation equipment, sources close to NTRA say it is likely the authority will require new operators to lease TE facilities until at least the end of 2008 to further ease the impact on the national company.
