Noor ADSL invested about EGP 700m in the Egyptian market since it launched. The company plans to offer ADSL services to individuals over the next year.
Fadi Jundi, president and CEO of Noor ADSL, told Daily News Egypt that the company has suffered during the last period due to service costs increasing by 40% given the high US dollar exchange rate. The company now plans to rely on value-added services to support its growth.
What is the strategy of Noor ADSL for the next year?
We will focus on value-added services, and have invested in some emerging companies that provide such services. These companies started operating in 2016 and achieved significant success. In 2017, we will focus on the expansion of these services all over the country, and outside of Egypt as well.
We also provide services related to cloud computing and hosting at database centres, as well as cybersecurity. We aspire to provide these services at competitive prices compared to other service providers. Currently, we also offer our services to a number of banks.
What are the main value-added services the company is focused on?
The value-added services change according to the type of emerging companies that receive our investments, including medical services, reservation, and administration for small- and medium-sized enterprises (SMEs) through a company named Zabatny . We expect a huge success in this field inside and outside Egypt.
Do you plan to reduce ADSL prices to offer your services for individuals?
Under the current conditions and the high US dollar price, we cannot lower our prices to attract individual subscribers, especially as the cost of ADSL services is paid in foreign currency, including international submarine communications cables, imported devices used in providing the service. Additionally, the cost of operation was recently increased due to high energy prices. Some contracts incurred losses and our profits were affected significantly as a result of the fluctuations in currency exchange.
Therefore, we rely on the high quality of our services to attract more individual customers. In 2016, we did not expand as planned in that sector because we were anticipating the resolution of the MASAN cabins problems, which are used by Telecom Egypt to replace copper cables with fibre amid the development of the sector’s infrastructure. We also cooperate with our 15 partners to offer ADSL services to other governorates.
Telecom Egypt has implemented a large part of the infrastructure development as about 50% of customers use fibre cables now, so we will work on expanding our services among individuals in 2017.
The government will impose the value-added tax (VAT) on internet services in 2017. How do you see the impact of this decision on the sector?
The majority of internet users believe that the cost of internet services should be lower as long as it continues to spread—this is not true. We, like all other sectors, raised the prices of our services due to the VAT, but its impact will be minimal and barely felt by the user, except at the beginning of implementation.
Does the company intend to bear a part of the high prices?
No, we cannot afford that, because ADSL services are the sector most affected by the high US dollar price due to the flotation of the Egyptian pound; however, the service prices hadnot changed.
How big is Noor ADSL’s market share? What are your plans to increase it?
Our market share ranges between 1-1.5%, and we are the only company that has achieved a growth rate of 10% during the last period, with the exception of TE Data. Other competitors witnessed a decline in the number of users over the past months.
We have plans to increase our market share to 5% over the next two years, in line with the current growth and the quality of our service.
How do you see the ADSL market after competitors became integrated operators of telecommunication services?
After the launch of the 4G services, we believe that cooperation between mobile operators and Telecom Egypt will be more flexible, due to their common interests. We believe that Noor will benefit from the launch of the 4G services through our value-added services that we provide to customers. These services used to be provided through the 3G frequency, but 4G will allow us to expand this type of service.
How fair is the competition in the Egyptian market?
During the last period, we have noticed a change in Telecom Egypt’s policy with its competitors and the National Telecommunications Regulatory Authority (NTRA) played a vital role in the reorganisation of the sector. We think that the launch of the 4G services will support healthy and fair competition.
How could the acquisition of 70% of the ADSL market by a single company serve fair competition?
We believe that fair competition requires a small number of companies which offer ADSL services. At the same time, no single company should acquire a large share of the market at the expense of other companies.
Recently, there have been negotiations to reduce infrastructure rental prices. How are these negotiations developing?
These negotiations were not completed because the ADSL companies and Telecom Egypt were focusing on concluding the 4G licences contracts, but we will resume negotiating over the infrastructure rent prices with Telecom Egypt in the coming period.
You had a plan for offering WiFi in public places. What happened to that plan?
Unfortunately, we dropped the plan due to the difficulty of obtaining security and NTRA approvals. It will be useless anyway after the launch of 4G services.
What are the main growth opportunities in the internet market and the main challenges during 2017?
We believe that there are great opportunities in value-added services, especially since the internet has become an essential service. The high cost of the service is our biggest challenge due to the current economic situation in Egypt, as service costs increased by 30-40% during the last period.
What is the size of Noor ADSL’s investments in the Egyptian market?
Noor ADSL has invested about EGP 700m in the Egyptian market since it launched.
How many companies benefit from your investment incubator? And what is your plan for the coming period?
We are currently investing in three companies, including medical services, public services for SMEs, and travel services. We are also studying potentially investing in two emerging companies. We plan to inject investments ranging between EGP 500,000 and EGP 1.5m in exchange for the acquisition of a controlling stake in each company.