Sunday, April 08, 2007

Egypt's Telecom Market Intelligence Report

Egypt's telecommunications sector is one of the fastest-developing markets in the Middle East and Africa (MEA) region, despite the fact that the fixed-line market is effectively monopolised by the state-owned incumbent operator, Telecom Egypt. The same company has a stake in Egypt's second-largest mobile telephone company - Vodafone Egypt - and also has stakes of varying sizes in the country's many value-added and Internet service providers (ISPs).
As the result of sustained network development and expansion, as well as the adoption of a free national Internet service, Egypt's fixed-line subscriber base has risen from just 3.9 million lines at the end of 1998 to around 10.4 million lines at the end of 2005. In the meantime, the waiting list for the installation of fixed lines has fallen from 1.4 million at the end of 1998 to a little over 66,000 by the end of 2005. At the same time, the Internet market has grown from around 150,000 users at the end of 1998 to around 5.0 million users by the end of 2005. The Egyptian authorities now expect to see the Internet user base soar to around seven million by mid-2007, representing just 10% of the population. In June 2004, the Egyptian government launched a public-private initiative to boost broadband access; the government also plans to raise awareness among small and medium-sized businesses about the advantages offered by broadband services. The Egyptian Ministry of Communications & Information Technology (MCIT) is actively supporting the use of computers at home, in schools and universities, as well as in businesses of all sizes. To further this end, the government is guiding Telecom Egypt to establish low-cost and transparent network interconnection and equipment co-location agreements with ISPs and application service providers throughout Egypt.
Egypt's mobile communications market has also witnessed strong growth in recent years, starting with 194,000 subscribers at the end of 1998, rising to 5.8 million customers at the end of 2003, 7.6 million customers by the end of 2004, and 12.8 million by the end of 2005. While cellular operators MobiNil and Vodafone Egypt initially were not able to acquire GSM 1800 frequencies to boost their existing GSM 900 offerings, a deal was done in late-2003 that split Telecom Egypt's GSM 1800 frequencies between the two companies, with MobiNil paying cash for its spectrum and Vodafone Egypt granting the incumbent a small, indirect stake in its business in return for its share of the spectrum. In the meantime, MobiNil and Vodafone Egypt are offering 2.5G services, such as WAP, GPRS, and SMS. A third GSM operator is to be licensed in 2006; an auction for this licence should close in May/June, with the new operator able to launch its services from 2007.
Egypt's telecommunications market was first opened to competition in 1997, when concessions to operate public payphone services were awarded to Menatel and Nile Telecom. Menatel has proved to be rather more successful than Nile Telecom, operating 30,810 payphones at the end of 2005, compared to Nile's 18,687; Telecom Egypt also operates a small-scale public telephone network, with 6,213 units in service at the end of 2005.
Public data networking services were liberalised in 1999, and the first wave of Internet service providers were able to enter the market in this way; however, it was not until the following year that the market for Internet infrastructure was opened to competition. The market for high-speed access services was liberalised in 2001, while the first virtual operators - mostly ISPs - were licensed in 2003. There were more than 200 ISPs in Egypt at the end of 2005. A revised version of the country's Telecommunications Act was adopted in February 2003, giving greater powers to the regulator, the National Telecommunications Regulatory Authority (NTRA), and broadening its remit to cover all aspects of the information and communications technology (ICT) market. The new law also protected Telecom Egypt's monopoly on fixed-line telephony services until the end of 2005; new international and local fixed-line carriers were expected to be licensed in 2006, but these plans now appear to have been put on hold until 2008. A public offering of shares in Telecom Egypt was completed in late-2005.

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