Telecom Egypt (TE) has control over the telecommunications infrastructure and makes huge revenues by leasing its lines—more than any other company in the Egyptian telecommunications market.
However, despite its apparent success, the company has sought a seat on the mobile operators table for years. This has raised questions: why would it attempt to enter a new arena and compete with three established mobile operators—Vodafone, Orange, and Etisalat—who already have a strong foothold in the market.
According to the financial statements of TE, the company’s profits are estimated at EGP 4bn. Most of these profits came from renting out infrastructure to the three major mobile operators and their affiliated internet companies. TE Data and Exceed also contributed to a portion of TE’s profits.
Meanwhile, the profits of Vodafone, Orange, and Etisalat combined reach EGP 4bn, as Vodafone registered EGP 3bn, Etisalat EGP 1bn, and Orange lost EGP 40m.
TE owns 45% of Vodafone Egypt, which means that the company receives EGP 1.3bn from Vodafone Egypt’s profits. Adding this to TE’s mentioned profit, its earnings rise to EGP 5.3bn.
On the other hand, Vodafone loses that figure of its earning, dropping its profits to EGP 1.7bn.
Without even entering the mobile market, TE is already the most profitable company in the sector with a 60% market profit.
Monopoly over infrastructure frightens mobile operators. TE being the sole infrastructure provider allows it to cut off internet from subscribers to other internet providers, as had happened when the infrastructure’s copper cables were replaced with fiber. This literally forced a large number of customers to terminate their contracts with other companies and switch to TE Data.
Even scarier, TE has not signed a rental agreement for its infrastructure with Etisalat Egypt since the latter entered the Egyptian market in 2007. TE’s agreement with Orange has been in courts until today, and similar issues with Vodafone were only settled two months ago.
Mobile operators are complaining of the absence of fair regulating mechanisms in the market, given that one company owns the infrastructure at the core of their business.
According to a source in one of the mobile companies, who requested anonymity, TE’s role in the ADSL internet market frightens mobile operators as to what would happen should TE obtain a 4G licence.