Telecom Reform Milestones

****JavaScript based drop down DHTML menu generated by NavStudio. (OpenCube Inc. - http://www.opencube.com)****

	Press Releases
	News
	Features
	Press Kits
	Photo Gallery
	What's New

Home

Telecommunications

Telecom Reform Milestones

      - Master Plan
      - Deregulation of the Mobile Services Sector
      - Data & Internet Services
      - Pre-paid Calling Cards
      - Enlargement of Ownership Base of Telecom Egypt
      - International Telecom Services
      - Third Mobile Network

Telecom Master Plan

In June 2000, MCIT, in coordination with the private sector, has formulated the Telecom Master Plan. The plan suggests strategic economic, business, services and technical directions and a framework for Egypt's Telecommunications Infrastructure. The plan calls for the following:
   - Emphasizing the need to raise teledensity and teleaccessibility in Egypt
     through restructuring tariffs of both multi-line business and residential
     services to more cost-based figures and using a Universal Service Fund (USF)
     to subsidize annual charges and installation fees for eligible customers.
   - Establishing a reliable, scalable, and readily available multi-service high speed
     telecommunications backbone through the transition from the circuit switching
     technology into a more efficient packet switching technology.
   - Liberalizing access services through unbundling, sharing of facilities and
     wireless services.
   - Adopting standards to facilitate interconnection.
   - Introducing new telecom services with new features and capabilities to the
     Egyptian market, with the appropriate Quality Of service (QOS).

Deregulation of the Mobile Services Sector

In 1998, two Egyptian international consortia were granted licenses for providing GSM services in Egypt. These were Vodafone Egypt, which consisted of Vodafone PLC and Egyptian investors, and MobiNil, which consisted of Orange, a number of Egyptian investors, and Orascom Telecom. Several positive outcomes of the program of deregulation have been as follows:
    - Wealth generation of almost EGP 35 billion, with competition leading to:
           * investments of EGP 10 billion by the 2 companies;
           * generation of around 5000 jobs and 15000 indirect jobs;
           * lower tariffs through affordable packages;
           * government proceedings of almost EGP 7.4 billion;
           * listed mobile companies becoming the primary driver of Cairo Alexandria
              Stock Exchange and are attracting FDI into Egypt directly and through
              GDRs.
    - Fixed teledensity has reached 14.7 percent (10.5 million subscribers) while
       mobile teledensity reached 19.3 percent (13.9 million subscribers) resulting in
       an overall teledensity of 34 percent in January 2006.
    - Egypt is also set to become a regional leader in mobile technology through
       the development of Egyptian know-how in the area of design, establishment
       and maintenance of 2/2.5G networks.
    - The evolution of Orascom Telecom as a regional operator through acquisition
       of licenses in MENA, Asia and most recently in Europe.

Pre-paid Calling Cards

As part of the progressive telecom deregulation process, NTRA approved two licenses in 2003 for the provision of pre-paid cards in the local Egyptian market.
A third provider of prepaid calling cards was subsequently allowed into the market. Availing pre-paid cards has encouraged demand for fixed to mobile calls, national and international calls.

Data and Internet services

Internet services in Egypt started in 1993 via a 9.6K link between the Egyptian Universities Network and France carrying Bitnet as well as Internet traffic. There were only two providers: the Egyptian Universities Network (EUN) and the Information and Decision Support Center (IDSC) of the Egyptian cabinet. The user community at the time was estimated at about 2000 users.

In 1994 the Egyptian domain was divided into three major subdomains: the academic subdomain (eun.eg and sci.eg), which is served via the Egyptian Universities Network (EUN); the commercial subdomain (com.eg); and the governmental subdomain (gov.eg). The latter is served via a partnership between IDSC and the Regional Information Technology and Software Engineering Center (RITSEC).

In 1996, the Egyptian government started developing an Internet backbone and gateway facility to serve the private sector Internet Service Providers (ISPs), providing commercial Internet services in Egypt for the first time. With the formation of MCIT in 1999, several initiatives were launched to expand broadband capacity and establish a reliable and fast Internet backbone. Several ISPs were licensed by NTRA to build their own data backbones and expand their broadband capacity by obtaining separate international gateways.

Broadband access has been available in Egypt since 1998 through Integrated Services Digital Network (ISDN). Digital Subscriber Line (DSL) was introduced in Egypt following the unbundling of local loops, which took place in 2002. Licensed service providers were allowed to share the local loop with Telecom Egypt to provide broadband data services.

The Free Internet Initiative was launched 2002, offering free access nationwide without any restrictions. The initiative provides easy and affordable access to the internet at the cost of a local telephone call and with no additional subscription fees.

Having realized the need to build an ‘e-society’ and join the global Information Society, Egypt is leading an ambitious broadband initiative, with the objective of increasing broadband penetration. The three year broadband initiative focused on increasing ADSL penetration, introducing WiFi hotspots in public areas, promoting WiMAX deployment and promoting wireless LANs in residential areas.

Internet services are now provided by Telecom Egypt in conjunction with 214 Egyptian ISPs to around 5.1 million users. The following chart maps this dramatic growth from 1999 to 2005.

Enlargement of the Ownership Base of Telecom Egypt

As part of Egypt’s strategic direction to promote efficiency and healthy competition in the telecommunications sector, the process of privatizing Telecom Egypt began in 2005. An RFP was announced in local and international newspapers in May 2005 to select a Financial Adviser to conduct a comprehensive market study for enlargement of the ownership base of Telecom Egypt, and an international consortium was awarded a contract to act as a financial advisor for the Telecom Egypt share offering.

The consortium forwarded a study to the Cabinet by the fourth quarter of 2005, and in line with the provisions of Telecom Law No 10/2003, a 20 percent stake was offered in an IPO of Telecom Egypt with a total value of 5.125 billion LE.

Proceeds from the Telecom Egypt IPO were estimated to be over 5 billion LE, reflecting a total enterprise value of 25.5 billion LE. This exceeds the 22.7 billion LE enterprise value that had been initially approved by the Egyptian cabinet by 12.5 percent. Thus the IPO has successfully increased Telecom Egypt’s market value. A 5 percent stake was allotted to Telecom Egypt’s 55,000 employees at a discount of 20 percent. After payment of IPO related expenses, the proceeds were transferred to the Egyptian treasury. Transparency was a major success factor in Telecom Egypt's IPO process which was the largest international IPO in the Middle East. The process reflected trust in the Egyptian economy, trust in restructuring of telecom sector, and trust in the role of the private sector.

Telecom Egypt’s IPO revitalized the Egyptian stock market by attracting 55 billion LE of Egyptian investments, raising the daily value traded to 1.5 billion LE. The IPO attracted 250,000 first time investors to the Egyptian stock exchange which reflects Egyptians’ trust and willingness to participate in the privatization process.

Deregulation of International Voice Telecommunications Services

Up until the end of 2005, Telecom Egypt had the exclusive right to establish and operate international gateway facilities. Egypt since successfully committed itself to the deregulation of international voice telecommunications services by the end of the first quarter of 2006. The government has provided a number of licenses for private sector ventures to provide international voice and data telecommunications services in a transparent process.

NTRA announced the framework for licensing local and International companies to provide international voice telecommunication services starting in 2006. The step comes in fulfillment of Egyptian commitments to liberalize telecommunications services under the World Trade Organization Agreement signed by the Egypt in 2002.

As part of a technology neutral approach, the licensed operators will have flexibility for using appropriate technologies for relay of transit voice and data traffic and interconnection with licensed operators in Egypt and abroad. This is expected to maximize the utilization of the central geographic location of Egypt at the cross roads of three continents and will result in new services in a competitive environment. The licensed new ventures are expected to transfer knowledge and attract further investments.

Third Mobile Network

With mobile penetration currently around 19 percent, the market remains fertile ground for potential investors. According to telecom studies, the growth of mobile penetration in Egypt is expected to reach around 40 percent by 2008/2009. In this respect, NTRA has published an RFP for international auction of a third mobile license setting up the exact terms and conditions of the license.

The final auction round was held on July 4, 2006 where the third mobile operator license was granted to a consortium led by Etisalat of Emirates. The consortium also includes Egypt Post, National Bank of Egypt and Commercial International Bank.