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International gateway revenues to TE will drop in 2017: Beltone - Daily News Egypt

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International gateway revenues to TE will drop in 2017: Beltone

The launch of international gateway licences to Vodafone and Orange will threaten TE’s revenues


Beltone Financial Holding told Daily News Egypt that the international mobile phone wholesale business will decline in 2017 after Vodafone Egypt and Orange Egypt acquire the international gateway licence at a cost of EGP 1.8bn per licence. This constitutes a discount of roughly 50%, compared to the value of previous offers made by the National Telecom Regulatory Authority (NTRA).

Beltone will review projected revenues from the international gateway sector, which represented 24.4% of Telecom Egypt’s (TE) total revenues in 2015, and adjust the estimates of the expected revenues from this sector.

The investment bank expects a revenue decline in the international wholesale business. It also predicts that the anticipated revenues of TE’s mobile activity will not offset the revenue decline after the licences are issued.

Beltone noted that the international gateway revenues will be protected for a medium-term period, due to contracts signed with Vodafone and Orange in 2015.

Beltone added that TE’s international gateway revenues will not remain stable, causing  TE to lose customers. Vodafone and Orange are expected to negotiate and amend the signed agreements with TE.

The NTRA reviewed the companies seeking licences and new network frequencies, and determined that the value of providing mobile phone licences and 4G frequencies to TE is EGP 7bn.

The NTRA will provide Orange and Vodafone with the licence and 4G frequencies at a cost of EGP 3.5bn, while TE will get the licence and 3G and 4G frequencies for EGP 4.6bn.

Beltone commented that the value of the licences to TE, EGP 7bn ($790m), was  40% higher than estimated, EGP 5bn ($560m).

The bank noted that the cost of the licence is too high in light of the mobile market saturation in Egypt.

Beltone also confirmed that the price of the licence and 4G frequencies determined by the NTRA, is  high compared to the value offered in the Pakistani market to the company Zong in 2014, which amounted to  $210m.

Beltone added that the discrepancy came at a time when the Pakistani market was enjoying superior growth rates compared to the Egyptian market. According to data received in March, the proliferation rate of mobile phones in Pakistan was roughly 69%, compared to 110% in Egypt. Additionally, Pakistan’s proliferation rate of mobile phones reached 29%, compared to 27.3% in Egypt.

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https://www.dailynewsegypt.com/2016/06/18/international-gateway-revenues-te-will-drop-2017-beltone/
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