Telecom Egypt has been granted permission by the Egyptian government to obtain a unified licence for branded mobile services, which will cast doubt over the future of its partnership with Vodafone Egypt.
The predominantly state-owned Telecom Egypt has held a monopoly over the country’s fixed line services but until now has not been able to offer mobile services. However, now that the government has given the go ahead to the National Telecommunication Regulatory Authority (NTRA)’s proposals, Telecom Egypt will be able to provide mobile services via its rivals’ infrastructure.
In exchange, mobile providers Etisalat, Mobinil (owned by Orange) and Vodafone Egypt will be able to use Telecom Egypt’s fixed infrastructure for an optional EGP100 million fee (US$14.3m). Telecom Egypt’s licence, which does not include spectrum, will set it back EGP2.5 billion ($358 million).
Mohammed Elnawawy, Telecom Egypt CEO, said that his firm would seek to “develop the necessary commercial agreements with our business partners and expedite the steps set out by the NTRA”.
The government’s approval of the unified licence is complicated by Telecom Egypt holding a 45% stake in Vodafone Egypt, which is currently valued at around £1 billion. Now that Telecom Egypt can offer mobile services, its ownership of the stake creates a conflict of interest so it will likely have to sell.
Vodafone reportedly has first refusal on the stake, and has gone on the record to say that it may consider international arbitration. The firm has also complained that the use of Telecom Egypt’s aging copper network does not constitute a fair exchange.
For its part, Telecom Egypt could sell to another local firm or float the shares on the Egyptian stock exchange.