CAIRO: Under the auspices of Tarek Kamel, minister of communication and information technology, Orascom Telecom (OT) and Intel Capital, the venture capital investment arm of Intel Corporation, announced on Tuesday that they have signed an agreement to create Orascom Telecom WiMAX Limited.
This joint venture company will work with the government and private sector to obtain suitable spectrum licenses for the deployment of WiMAX (worldwide interoperability for microwave access) services, a technology whose purpose is to ensure that broadband wireless radios manufactured for customer use, interoperate from vendor to vendor.
The newly formed company is also the first investment made in the Middle East using Intel Capital’s $50 million capital venture fund, allocated to promote technology growth in the MENA and Gulf region.
The Intel Capital Middle East Fund is a $50 million venture capital fund for investment in technology companies developing innovative hardware, software, local content and services throughout the Middle East and Turkey. The fund will invest in companies that complement Intel s technology initiatives to further build up the Internet infrastructure in this emerging region.
Egypt is the first Middle Eastern country to take a bite out of the fund, which is up for grabs to Middle Eastern countries and Turkey. It also marks the first collaboration between Intel and OT.
“I think what is significant here is that we have Middle Eastern companies competing for development in the IT industry, says Naguib Sawiris, chairman and CEO of Orascom Telecom. “Intel had many choices around the world, but this is the first venture affected out of the fund and it went to an Egyptian company in Egypt. They would not do that if the environment here was not progressive.
“Global companies are beginning to really invest in Egypt, says Kamel. “We are saying that things are changing. We are talking, telling industry that we are starting new, that [foreign investments] will grow, succeed and from it we will get capital gains and new services. We are in a race with the region, and in our steps in the industry and ministry we are hoping to beat our competition
According to the minister, the government strongly supports ventures between Egyptian and multinational companies that help create new global entities, allowing Egyptian talent to participate actively on a global scale. The partnership between OT and Intel is evidence that Egypt is embarking on a new wave of investment partnerships, states the minister.
“As a government we encourage this and the spread of venture capital in Egypt. We welcome any investments in WiMAX. We need to do this to attract further foreign direct investment and the growth of the industry, says Kamel.
Early broadband wireless systems began as extensions of indoor LAN (local area network) technology known as Wi-Fi.
However, these technologies are configured for best performance in small venues and at short range, which is where WiMAX comes in. The deployment of WiMAX, which is based on newer technology, will offer cheaper, more effective and faster deployments of broadband mobile wireless systems.
For mobile operators who use broadband wireless and 3G technologies, the cost of the technology is much higher in relation to its spectral efficiency. The same goes for the fixed broadband wireless industry, which has suffered due to its inability to create a cohesive technology strategy, restricting certain features to certain companies. With WiMAX, mobile and fixed line operators will have access to a better broadband technology concept that can significantly reduce costs, improve spectral efficiency and deliver profitable services.
“This is the future, says Sawiris of WiMAX technology. “This is the new way for mobile companies to enter the market and compete. Every time a company loses time to include WiMAX technology, they are either losing an opportunity or living with future failures that they are currently unaware of.
According to Sawiris, WiMAX comes with many benefits, such as greater network distances. Instead of installing wireless systems every three to four kilometers in order for customers to have network, with WiMAX, the company will have to install such systems every 10 km.
“There is a real problem with infrastructure everywhere, not just in Egypt or the region. It’s a global issue, says Gordon Graylish, GM and vice president of sales and marketing for Intel EMEA. “With WiMAX, people will have network and connection no matter where they are or what they are doing.
According to Graylish, Egypt have the right investment climate, environment and dynamic partners. Due to large distances and the country’s poor wireless structure, the deployment of WiMAX in Egypt is strategic in showing results.
Graylish also stated that the company is pleased with the speed of the government in getting this venture off the ground. At the conference, the minister announced the timetable of the framework for the venture, stating that in six to eight weeks the framework will be launched, with the second phase of the framework to be launched in October 2006.
“Aside from the friendly investment climate, Intel also chose Egypt because of Orascom, which, as a company, has the know-how and regional presence to deploy WiMAX in the region successfully, adds Sawiris.
OT is in fact taking a giant leap of faith in WiMAX, which has yet to prove successful in the global market. This is the first time OT has invested in a new technology where the business plan has yet to be put into place.
“This is the first time we are not investing in guaranteed dried dollars. Today, we are re-charging the investment profile of the country. Instead of riding someone else’s wave, we will create our own, says Sawiris. “Egypt will become experts in this technology, which will have an effect on our economy.
Yet Khaled Bishara, board member of OT, was quick to add that this is not just an Egyptian venture.
“We are building this today for the region and then we will spread the knowledge and the service, he says.
While the amount taken from the fund and the cost of license were not disclosed, Bishara states that both companies have deep enough pockets to launch the technology once the license has been procured.
Orascom Telecom WiMAX Limited will be majority-owned by Orascom Telecom of Egypt with Intel Capital as the lead investor, providing access to significant technical and marketing resources.
