Winner of Egypt s third mobile license puts rumors to rest
CAIRO: Etisalat, the UAE-based mobile operator that was recently awarded the third Egyptian mobile license, will not be selling any of its shares to anyone at this time, according to Etisalat chairman, Mohammad Hassan Omran.
The chairman’s statement comes hot on the heels of a media frenzy that was triggered after an Arabic daily newspaper published an article that quoted the company’s general manager for international business, Jamal Al Jarwan, as saying that Etisalat was considering selling around 15 percent of its stake in the Egyptian license to a prospective bidder.
According to the media report, Jarwan stated that the firm, which has a 66 percent stake in the Egyptian mobile license, was considering several bids (most made by foreign firms as well as at least one UAE bidder) that were put to the company for around a 15 percent share in their latest, and what has become probably their highest profile venture.
However, putting the rumors to rest, Etisalat chairman, Mohammad Hassan Omran, has firmly stated that the company currently has no intention of selling a single percent of its stake to anyone at this time.
“We have received offers from bidders, stated Omran. “In fact, we are still receiving offers from company’s interested in purchasing part of [our] shares. However, Etisalat does not intend to sell these shares at this point, he added.
Like any venture that is expected to garner high returns, companies who see the potential for profit are keen for a part of the pie, yet that does not mean that the company will give them a slice.
Yet, despite the chairman’s repeated rebuttal of a sale, many can’t help but speculate on the “at this point part of the chairman’s statement, which indicates, while at this time the company will retain its 66 percent stake, the future remains uncertain and possibly, wide-open, to bidders.
This is not the first time for Etisalat to come under heavy scrutiny. Since being awarded the license, the company, which paid LE 16.7 billion, was accused of paying too much for the license in comparison to its value.
In fact, many Egyptian experts have argued that Etisalat would find it difficult to create value from the third license, even with the most optimistic estimates.
Counter arguing these statements, Omran said in an official company statement that given the country’s large population, the venture still represents many opportunities.
In this, Omran has a point. With a population of more than 75 million, and a low penetration rate, the Egyptian market is ripe for the picking.
According to Pyramid Research, an economist group company that provides international market analysis and consulting services, the penetration rate in 2006 is expected to reach 22.2 percent. Penetration to the addressable market is also expected to reach 48.5 percent by the end of the year. While a marked improvement to 2004, (when penetration rate was 10.5 percent, and penetration to addressable market was 23.1 percent), it is still far from full capacity.
Furthermore, according to Omran, the third operator will assist in combating the high unemployment rate in Egypt by providing a large number of job opportunities, in addition to developing the telecom industry in the country, and offering newer services to customers once it launches its operations.
Etisalat was also accused of focusing its efforts on expanding abroad, in international markets, whilst neglecting development in the region.
Once again, Omran has to publicly defend the company, stating that while the firm’s expansion plans do extend to overseas markets, the company still focuses on the UAE and Arab markets.
“Etisalat extends its presence in the regional and international markets by buying stakes and establishing new companies after winning the operational license, he was quoted as saying to gulf news. “Expansion plans do not mean that we will not develop and create new services for our [existing] customers, he added.
If that wasn’t enough to deal with, 3G technologies, which is expected to become the third license s competitive advantage over its two existing competitors in the Egyptian market, has not lived up to its reputation abroad.
According to Reuters, European mobile phone companies, which spent $129 billion (LE 735.3 billion) six years ago on this technology, have not yet reaped the profit from 3G technology, which gives its users the ability to virtually live through their mobiles. From reading emails, browsing the internet, placing video calls, and monitoring their health from anywhere.
The reason for this is simply that, for the most part, mobile users continue to use mobiles for a single purpose: to make calls.
If Europe, where telecom technology is much more advanced than the Arab world, is still waiting for 3G to prove to be more than just an additional, expensive technology, then companies like Etisalat will probably wait longer, or work harder, to promote this technology in a region where most people do no more than talk on their phones.
With all this brewing in the Etisalat pot, is the third license worth the headache? Time will tell.
