Operator to start services “one day after Etisalat
CAIRO: The Ministry of Communication and Information Technology (MCIT) and Vodafone Egypt (VFE) signed a contract yesterday for the latter’s purchase of a 3rd Generation operation license for LE 3.4 billion.
The signing comes just one month before new mobile operator Etisalat is due to launch its services, including 3G, in late February. VFE Corporate Affairs Director Omar El Sheikh said his company is preparing to offer its 3G services “one day after Etisalat or on May 21, whichever comes first.
“The government has already given Etisalat the right to begin offering their service first, so we will be ready to go the very next day, El Sheikh told The Daily Star Egypt. “If they do not until May 21st, then we reserve the right to start our operation.
Omar declined to disclose the specifics of how the licensing fee will be financed but said part will be paid from company revenues and the rest through an installment agreement with the National Telecommunication Regulatory Authority (NTRA), the sector regulation arm of MCIT.
Mobinil is yet to announce its intention to acquire a 3G license, but company officials have confirmed negotiations are ongoing. In September, the company agreed to cease offering its Enhanced Data for GSM Evolution service, a high-rate data transfer technology, after losing a long dispute with the NTRA.
Despite doubtful telecom analyst forecasts for the growth potential of 3G technology in Egypt, mainly due to its high costs for the consumer, El Sheikh said VFE is counting on the service to generate strong revenues.
“We’re taking this license for two purposes, El Sheikh said. “The first is to provide our customers with the 3G services they need, and the second is to obtain the frequencies we need to maintain and improve our 2G services. We expect there will be demand [for 3G services] and it will grow rapidly because of the increasing convergence between information technology and the telecommunications sectors.
El Sheikh said VFE has allocated LE 1.8 billion to infrastructure upgrades in 2007, including developing its 3G services, bringing the total amount spent since 2005 to about LE 3.5 billion. In addition to the licensing fee, VFE will have to pay the NTRA 2.4 percent of annual 3G revenues, a figure set according to the LE 16.7 billion paid by the Etisalat-led consortium for the country’s third mobile operator’s license.
“In a race, you can either keep fighting with the competition or you can be faster, El Sheikh said. “We plan on becoming faster so we do not have to keep fighting.
Earlier this month Etisalat Egypt Chairman Salah Abduli confirmed the company has begun trial operations and is on schedule to enter the market in late February. Abduli said the trials included 3G testing, adding the company is now working on improving its video-call quality. Etisalat plans to achieve 70 percent coverage after its first year and add 10 percent per year thereafter.
According to NTRA figures, mobile penetration reached 22 percent in November, 2006. MCIT projects the number will reach 40 percent by 2010.
