The recent announcement by the chief executive officer of Telecom Egypt (TE), Mohamed Al-Nawawi, that his company would start operating as a mobile services operator by mid-July coincided with the National Telecommunications Regulatory Authority's (NTRA) declaration that the final details of the country's integrated licences would be available within a few days. The new licences will grant the landline operator TE, Vodafone Egypt, Mobinil, and Etisalat Misr the right to provide mobile telephone and Internet services as well as fixed landline services using the existing infrastructure of the four companies. The three existing mobile operators currently do not have licences to provide landline services. However, some experts believe that the market is already saturated with penetration level standing at over 120 per cent, and they say it will not support a new mobile operator. “A fourth mobile network in the market will have difficulty making profits because of the fierce competition in the telecoms sector which has led to low-priced services,” said Ehab Said, head of the telecommunications division at the Cairo Chamber of Commerce. He added that a fourth competitor in the market might lead to new cuts in the prices of some services offered to customers, but would probably not make the desired profits for the companies. “This goes against the investment and commercial purposes of issuing a new licence,” Said stated. He also said that the third mobile operator, Etisalat Misr, which started operations in 2007, still suffered from low profit margins, especially since the market had slowed down over the past two years and the number of mobile service subscribers — some subscribers have more than one mobile line — had fallen from over 97 million to about 93 million today. However, Al-Nawawi said that his company would be able to compete by being the first operator to introduce fourth-generation mobile communication technology that offered ultra-fast broadband Internet access. Another advantage that would help TE attract potential clients, he said, was that the company would be able to provide both mobile and landline services. TE has been suffering over the last couple of years from decreasing numbers of subscribers to its fixed landline services. Subscribers to the landline services, offered solely by TE, are currently estimated at 8.6 million, compared to 9.22 million in May 2011. The company announced last month that its net profits had fallen in the first quarter of this year by 6.2 per cent to reach LE858 million, as compared to LE914 million during the same period last year. Entering the mobile telephone services market might seem to be one of the few options remaining for TE, which has a massive workforce of 50,000 employees. The draft of the new integrated licence regulations requires all companies to settle any disputes, and this is believed to be behind the delays in issuing the licences. Both Vodafone Egypt and Mobinil have debts to TE worth LE8.8 billion, and the companies are still trying to reach a settlement. Al-Nawawi has announced that his company will not give up the money in exchange for the new licence. Speculation about the future of TE's stake in Vodafone, which stands at a 45 per cent share, if it is to obtain a licence for its own mobile services, was ended when Amr Badawi, head of the NTRA, said that TE's share in Vodafone Egypt was not part of the discussions over granting the licences to initiate mobile services. Badawi said during a press conference last week that the government would need to approve the details of the new licences once the consulting firm responsible had finalised its work over the coming few days. Al-Nawawi announced that TE was ready to offer its mobile telephone network services in fewer than 15 days once it had been officially granted the licence.
