CAIRO: Since the last World Economic Forum on the Middle East in Sharm El-Sheihk took place in 2006, the telecommunications sector has expanded faster than any other industry in the nation, with investments pouring into enhancing the IT infrastructure.
According to figures from the Ministry of Communications and Information Technology (MCIT), foreign direct investment in the sector has reached $1 billion annually and has contributed to 15-20 percent of overall GDP growth.
IT experts say no one predicted that 30 million people, around 40 percent of the population, will one day be mobile phone users. “In the mid-90s, when we looked at the business plans of the first operations in Egypt, people were expecting 500,000 users in Egypt, Chief Executive Officer of Information Technology and Services Co. (ITSC) Rahim El-Kishky told Daily News Egypt.
With the introduction of a third mobile license purchased by UAE-based Etisalat for LE 16.7 billion, the market is now witnessing rife competition between GSM providers, who are working hard to make sure they don’t losing their subscribers to their competitors.
“One of the main benefits of opening up the market to other players is definitely the competition that forces existing companies to give more rather than remaining stagnant, knowing that no one can take their place, said Mohamed El-Gebaly, economic analyst at EFG-Hermes.
The introduction of new market players has also allowed the sector to benefit from the influx of Gulf liquidity in improving Egypt’s telecommunication infrastructure and accelerating the number of internet users in the industry.
The MCIT has focused a large portion of its resources on expanding the IT infrastructure in Upper Egypt, by automating post offices, renovating Telecom Egypt Customer Support Centers and investing in IT clubs to expose Upper Egyptians to computers and internet usage.
Experts argue that one of the most important steps taken by the ministry to augment the sector is its three-year strategy – implemented from 2007 to 2010 – to liberate the fixed-line service by offering a tender for a second landline license that should commence operations in 2009.
The arrival of a second operator could be seen as a threat to incumbent Telecom Egypt; however, many argue that there is room for expansion in the fixed-line domain. Egypt currently has only 11 million subscribers out of a population of 80 million.
Since the bid was announced, Etisalat Egypt, Orascom Telecom and Egypt Post have expressed their interest in the second fixed-line license.
“Competition in the landline domain will create a revolution in the services provided to subscribers. The intensity should match the competitive atmosphere we see among GSM operators, El-Gebaly said.
Telecom Egypt widely expanded its services, including the introduction of automated billing and streamlining installation services, a few months after the announcement of the new license. Much more is expected when operations actually start in 2009.
Developing the IT sector has also focused on exposing Egypt as a lucrative investment destination, billing it as the next regional IT hub.
Through Business Process Offshoring (BPO) and Knowledge Process Offshoring (KPO), Egypt has been placed on the global offshoring map, by offering contact centers, call centers, IT production and software development services.
Egypt’s main focus in this domain will be providing Arabic content, addressing European markets and Australia, and partnering with India and the Philippines. Incentives will be given to those who choose Egypt, such as the least cost in telecommunications infrastructure, logistic support and continuous labor training, MCIT Minister Tarek Kamel had promised in 2007.
