Minister of Communications and Information Technology Khaled Negm said Telecom Egypt’s former chief executive, Mohamed Elnawawy, failed to financially and technically prepare Telecom Egypt to compete with Egypt’s mobile companies.
Seeking to place Telecom Egypt’s decisions in the same line with the government’s new direction, which is opposed by the board of directors led by Elnawawy, Negm sacked Elnawawy from the company. Negm called on the new board of directors to prepare the company to enter the mobile market, and reduce the infrastructure renting prices to private internet companies.
In August 2012, Mohamed Elnawawy took up the Chief Executive role at Telecom Egypt, contributing to a boom in ADSL internet services. As a result, the number of customers went from 1.2 million to 2.1 million last March, within two years of his taking on the role, an increase of 75%.
According to Telecom Egypt indicators, the revenues of data transfer services grew from EGP 1.3bn in 2012 to over EGP 2bn in 2014, an increase of 54%.
However, Telecom Egypt’s Board of Directors failed to prevent the reduction in the numbers of land line subscribers. This decreased to under 6 million customers last March, compared to 8.5 million when Elnawawy took up the role in 2012.
The data transfer sector contributed to helping the company’s revenues exceed EGP 12.1bn in 2014, the highest annual revenue for the company. However, profits decreased from EGP 2.9bn to EGP 2bn, which was attributed to the sacked Board of Directors increasing tax, and conducting a settlement with the National Telecommunication Regulatory Authority (NTRA) over delayed dues.
Elnawawy maintained Telecom Egypt’s profits and revenues, despite no new activities entering the company for at least three years. This means that the company was depending on its major activities, a Telecom Egypt official said.
Telecom Egypt increased its investments in the local market by replacing copper cables with fibre-optic cables, while it is to Elnawawy’s credit that he fought against the centralisation many governmental companies suffer from.
The official added that the marine cables activity witnessed growth during Elnawawy’s leadership. Telecom Egypt signed more than one agreement for the cables activity with a number of regional communication companies, while the activity became a steady source of income for the company, making approximately EGP 1bn annually.
Elnawawy redistributed the sources of income in the company, making retail services control the biggest share with 30% out of the total revenues, followed by the international services that represent 28%. The transactions with mobile providers amount to around 23%, and the institutions and corporate business unit represents about 14%.
Telecom Egypt was financially affected by the problems that occurred with the three mobile providers, making Elnawawy’s board of directors lose the profits of investments in Vodafone Egypt. For two consecutive years, Telecom Egypt did not acquire cash dividends from its investments in the mobile company after the latter refused to pay them. Moreover, the company lost a number of compensation cases against mobile companies.
The plan to replace copper cables with fibre-optic cables contributed to a conflict erupting between Telecom Egypt and mobile companies. The conflict made thousands of customers with private internet companies affiliated to mobile companies move to TE Data, affiliated to Telecom Egypt, after they lost the service as a result of the replacement operations.
Telecom Egypt invested about EGP 2bn in the process of replacing copper cables with fibre-optic cables over two years to cover 4 million customers.