CAIRO: Egypt’s telecom regulator postponed on Monday an auction for the second fixed-line license for a year, citing global telecom market woes.
This is the third time the auction is postponed.
“The National Telecom Regulatory Authority (NTRA) … has decided to postpone the auction for the second fixed-line network . after consulting the 12 interested bidders that cited turbulence in global telecommunications markets due to rising prices and inflation, the NTRA said in a press statement.
The NTRA added that communications and information technology markets have been hit by a global slowdown in the past months that made companies wary of new overseas investments.
Originally, the telecom regulator said it would auction the license on June 19, bringing Egypt one step closer to ending the monopoly of state-run Telecom Egypt, currently the country’s sole fixed-line operator.
However, the NTRA postponed the bid deadline three times since that date, first to July 29, then to September 18, and now for a year, citing turbulent global markets and continuing talks about interconnectivity agreement.
“This latest postponement was expected. They’ve been delaying it for a while, said Amr El Alfy, director of research at CI Capital.
“It [postponement] makes sense because current valuations on telecom markets are lower than their fair value. If they auctioned off the license these days, they would not fetch a good price, he added.
NTRA officials explained that a re-examination of the bid for the license will take place again next year.
“The NTRA consulted with the companies that expressed interest in bidding and concluded that a postponement is appropriate in order to raise value of the bid, said Karim El Qenawy, information officer at NTRA.
“This is similar to what happened with the third mobile operator license. When it got postponed, the bidding price was raised to LE 17 billion, he added.
Among 12 companies that have expressed interest in bidding are France Telecom, Orascom Telecom, Egypt’s Alkan, Egypt’s Giza Systems, Emirate’s Etisalat, Saudi Arabia’s Atheeb group, Alcatel-Lucent, and Kuwaiti investment firm Noor Financial Co.
Industry analysts give Orascom Telecom, Etisalat and France Telecom the competitive edge.
The winner will offer new fixed-line services, enhanced internet capabilities, and WiMax technology.
“Postponement of the license is good news for Telecom Egypt because this way it will remain Egypt’s sole fixed-line operator for a longer period of time, El Alfy added.
Meanwhile, the NTRA stated it would examine other alternatives to offering WiMax technology.
Telecom experts say for the new company to gain a competitive edge in the market it will have to win exclusivity bids and target corporate interests that might be lured by superior ADSL services as well as look into newly developed areas, such as Sixth of October.
The new operator will also be in a position to offer competitive overseas calling rates since the new license will include an International Gateway License.