Reuters
CAIRO: Egyptian mobile operator Mobinil will likely apply for a third-generation (3G) license this year, Chief Executive Alex Shalaby said on Tuesday.
My recommendation to the board is that we do this, apply for a 3G license in 2007, he said.
Mobinil s long-time competitor Vodafone Egypt acquired a 15-year 3G license for $586 million in January. Etisalat of the United Arab Emirates entered the market in May as the newest competitor, also with a 3G license, putting pressure on Mobinil to act.
Mobinil said in April it did not want to burden investors with the high fee and heavy operating costs of the 3G service. It also stopped providing the high-speed EDGE service (Enhanced Data for GSM Evolution).
That decision ended a year-long dispute with Egypt s regulators over whether the technology counts as a 2G or 3G service and whether it should require a 3G license.
We had to put this dispute behind us, said Shalaby.
He said he has strongly recommended applying for the license to the board because of the company s need for frequency spectrum.
Our growth in the last six months indicates that we will be running out of the allocated spectrum in the 2G sooner than previously expected, he said.
I see us starting to suffer in certain areas of Cairo and Alexandria [Egypt s second-biggest city], especially in congested areas, because of this frequency limitation.
He said Mobinil was also facing problems with site acquisition. That problem would be much less severe if we have 3G frequencies, he added.
Shares in Mobinil, which in February posted a nearly 6 percent rise in net income to LE 1.53 billion for 2006, was last trading up 8.42 percent at LE 185 a share. Traders said there was talk in the market the firm could make a decision soon to apply for a third generation license.
Yasser Hassanein of Dynamic Securities said the market was also optimistic Mobinil would offer higher quality 3G services than currently available.
Shalaby said if the board ultimately decides against his recommendation, Mobinil will revive its talks with authorities over the use of EDGE technology.
But I don t see this as a high probability scenario, he added.
France Telecom is the largest single shareholder in Mobinil with a 36.3 percent stake. Regional mobile operator Orascom Telecom holds 33 percent, while the remaining 30.7 percent floats on the Egyptian stock exchange.
