After years of drafting, the licences for integrated telecommunications services, expected to change the role of operators in the sector, are ready. But it now seems unlikely that the operators will get their new licences any time soon, as the government has decided to first create a national body for telecoms infrastructure. The integrated licences, first discussed in 2010, allow telecommunications companies to offer a full package of services, including fixed-line, mobile and data. According to this system, Telecom Egypt (TE), currently the country's only fixed-line provider, will be authorized to be a player in the mobile market through a virtual network that does not need new infrastructure because it uses the spectrum of other operators. The licences also give the mobile operators Mobinil, Vodafone Egypt and Etisalat the right to compete in fixed-line voice and data services, formerly monopolised by Telecom Egypt. To acquire the licence, TE will pay LE 2.5 billion, while each mobile operator will pay LE100 million for the fixed-line services licence. Hisham Al-Alayli, head of the National Telecommunications Regulatory Authority (NTRA), said the final announcement about the licences will be delayed until the framework of a new national body for telecoms infrastructure has been finalised. The NTRA finalised the licences and received company bids at the end of 2014, but the government then decided to link the launch of the new licences to the creation of this national body, specialized in building and operating infrastructure for telecommunications sector, security-related projects and national mega-projects. In November, the minister of communications and information technology announced that a number of governmental entities will take part in that national body, which will be run by the state. Telecom companies will be allowed to join, but only if they are part of a joint venture. Companies affiliated to the Armed Forces will be important contributors, but will not take a majority stake. The minister said that their share will be limited to “less then 51 per cent.” “We want Egypt to benefit from the growth in data traffic in the Middle East, which is reaching 38 per cent a year, and this requires infrastructure that is up to the highest international standards,” Al-Alayli said. “Infrastructure is expensive, and if left to each company on its own services would be overpriced,” he said, adding that the government decision to set up the new body will mean wide penetration and avoid the concentration of services in one area. “As a supervisory authority we should not get involved in creating companies working in the field,” Al-Alayli said. For this reason, he explained, the Ministry of Communications has set up committees to draft the legal framework of the new body. These will decide which operators will take part and the contribution of each. The NTRA has recommended that all telecom companies operating in the market contribute, Al-Alayli said. The delay in issuing the integrated licences means postponing the benefits TE was expecting to receive from entering the market as a direct provider of mobile services. But it also delays the risk of the company losing revenues from Vodafone and Mobinil, which currently use the company's gateway for international calls. The integrated licences allow both mobile operators to have their own international gateway. Etisalat Misr has had its own international licence since 2007. “We believe this could pose a sizable threat to TE's wholesale business, which represented 57 per cent of its revenue in 2013,” said a report from the HC investment bank in September. This threat was put on hold in mid-January, after TE signed a LE15 billion agreement to provide infrastructure and international calling services to Mobinil (for five years) and Vodafone (for three years) using TE's international gateway. The agreement ended a long dispute between the companies regarding the fees charged to use TE infrastructure. It gave operators the right to break the agreement if they decided to acquire their own international gateways. “The agreement should secure TE's wholesale segment until at least 2018,” said Ahmed Adel, an analyst at HC. He added that he expected the launch of its mobile services to be delayed until the second half of 2015. Integrated licences are one way to develop the market and meet international trends in the field, Al-Alayli said, adding that end users will benefit from the increased competition. “If they all offer the same products, the challenge will be directed to introducing lower prices or better quality,” he said.
