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CALLING ALL BIDDERS
I’m used to being put on hold when dealing with government authorities, but the three-year wait for a second fixed-line license to be put on the block is a bit long. After so many delays, I’d pretty much given up hope. Last month, the National Telecommunication Regulatory Authority (NTRA) finally announced a request for proposals for the license, which would break Telecom Egypt’s monopoly on fixed-line telephony. While it’s not a done deal yet, the NTRA seems committed to a mid-June auction date.
The date has been pushed back so many times I’m hesitant to report it. A fixed-line license was originally intended to be offered by the end of 2005 as part of the deregulation of the telecom sector in accordance with Egypt’s commitments to the WTO. Until now, the government has offered licenses for private firms to provide services by piggybacking on TE’s backbone, but the big prize – an independent fixed-line network – was repeatedly postponed.
And that’s a shame (unless you’re holding TE stock). Fixed-line services are Telecom Egypt’s cash cow, but consumers stand to gain far more by the introduction of competition into the market. If similar markets are any indication, services should improve and their cost should fall.
The NTRA has attributed the repeated delays in offering the license to the agency’s focus on ensuring market readiness and maximizing the value of the tendered license. Telecom Egypt’s IPO in December 2005, the issuance of a third mobile license in July 2006, and other sectoral developments, seemed to take priority.
But did the NTRA wait too long? So far, only six companies have declared interest in the license. These are France Telecom, Orascom Telecom, Alkan Group, Giza Systems, UAE’s Etisalat and Saudi Arabia’a Atheeb Group. There hasn’t been the kind of fervor we saw for the third mobile license, which was plucked by Etisalat for a whopping LE 16.7 million.
But rest assured, there is still value there. Egypt’s 75-million-strong population is a lucrative market – whatever its citizens may lack in spending power, they more than make up for in numbers. Fixed-line penetration is just 15.2 percent. The figure may be low, but a smart operator will see that as a plus, as it means more room for growth.
And there’s plenty of services to compete on. The new license will include an international gateway, data and Internet services, triple play, WiMax, local and international fixed voice service, and other value added services. Managed right, it could attract a lot of new subscribers. And if the new operator is able to undercut TE’s prices, there is nothing to stop service providers currently piggy-backing on TE’s infrastructure from switching networks.
CAM MCGRATH
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