By Mohamed Alaa Eldin
Technical issues remain in the unified licence system due to a delay in the system’s final offering, seven months after its announcement by the Ministry of Communications and Information Technology.
One of these issues lies within the status of shares owned by Telecom Egypt in Vodafone.
“Nothing will force TE to separate from Vodafone,” an official with the government-owned company said. The official added that the terms of the unified licence system do not provide for what TE would require to break off from Vodafone.
He added that the organisational structure of the unified licence system, approved by the Cabinet last September, stipulated “the formation of a sub-committee of the Ministries of Communications, Finance, Industry, Investment and the Financial Supervisory Authority”. This will help pin down the best alternatives to TE separating from Vodafone, he said.
The sub-committee has not yet been formed, indicating that the separation may not take place. TE owns 45% of Vodafone Egypt shares, through which TE gains revenues worth EGP 970m annually.
A report issued by OKAZ Investments, a financial consultation company, predicted that consolidated revenues for TE would grow by 21% in 2015 with additional support resulting from providing mobile services.
The report expected that revenues for TE’s retail sectors would increase at an annual rate of 12% for five years. The report added that retail revenues will comprise 49% of total expected revenues, compared to 43% in 2013, through extra support from mobile services which are expected to make up 22% of total revenues alone.
Lintatel for Telecommunications CEO and Chamber of Information Technology and Telecommunication (CIT) Board Member Hamdy El-Leithy said TE separating from Vodafone represents a government-owned company offering mobile services to prevent a conflict of interest.
At the same time, a Vodafone Egypt official stressed the need to separate Telecom Egypt from Vodafone in the event that the unified licensing system goes into force. The official said: “The service should not be allowed to be sold twice.” They also added that the proceeds will be reaped once through direct sale and again through TE’s shares in Vodafone.
Last April, the Ministry of Communications and Information Technology approved the unified licensing system, which will allow Telecom Egypt to provide mobile services in exchange for the licence. The licence itself is worth EGP 2.5bn, while mobile service companies offer landline services in exchange for EGP 100m.