CAIRO: Egypt's information and communication technology sector grew by 12 percent in 2010, said minister Tarek Kamel. Minister of Communications and Information Technology (MCIT) Kamel attributed the growth to the development of the mobile phone as well as internet sectors, local reports said. Mohamed Hamdy, telecommunications analyst at Cairo-based investment firm CI Capital, agreed, saying, “The fixed-line sector witnessed dormant growth due to fixed-mobile substitution given the severe competition by wireless companies, the drop in wireless per minute tariffs, and the decline in mobile phone prices.” He thus concluded that “usage is increasing in the mobile sector, while it is decreasing in the fixed-line.” In 2010, the mobile phone market grew by 20 percent, CI Capital said in a recent report, adding that in 2011 that number will slow down to 11 percent. Analysts expect the sector to be saturated by 2013, as the level of penetration will hit the ceiling at 100 percent. The firm predicts that the multi-SIM phenomenon, “attractive” on-net offers from all three major mobile phone providers, a drop in mobile handsets all coupled with lower subscription fees will be the driving factors behind saturation. On the internet front, the rate of penetration was 30 percent, or 20.3 million consumers, noting that this figure received a significant boost with MCIT deciding that both handset and USB internet devices would be included in the definition of an internet user. The sector is poised to receive further impetus from the offering of triple play licenses, which are expected to be up for bidding this month. Hamdy noted that TE Data is in the best position to profit from the availability of such licenses. Orascom Telecom is expected to make a bid for the second license. According to CI Capital, the new licenses will “add value to the fixed-line segment” of the market, which is critical, as it has been suffering due to dials shortages. Hamdy noted, however, that the fruits of the triple play licenses would most likely be felt in 2012 versus this year, adding that regulatory issues would need to be addressed. The firm forecasts that internet users will grow 15 percent to 25.6 million by the end of 2011, or a penetration rate of 32 percent. “The broadband segment should drive growth through fast and cheap connections,” CI Capital stated. In 2010, broadband uptake accounted for 60 percent share of internet penetration, and that figure is set to grow by another 5 percent in 2011, which will be at the expense of dial-up users. “This phenomenon” the firm stated in its report, “is the result of the faster and relatively inexpensive connection speeds available under ADSL tariffs.” In spite of such solid performance, hurdles remain that could potentially slow the expansion of internet services, namely the “relatively” high cost of owning a computer, Egypt's widespread illiteracy rate, lack of rich Arabic content online and pervasive illegal sharing of ADSL connection lines, the report notes. Nevertheless, the country's strengths lie in the vast size of its telecoms sector versus the rest of the Middle East and North African region, a burgeoning, young population and the sufficient infrastructure to support nation-wide network coverage.
