Egypt is considering a delay in the rollout of its fourth mobile license, due to economic concerns following the uprising that toppled former president Hosni Mubarak.
Egypt mulls delay in a fourth mobile licence after economics concerns
Egypt is considering a delay in rolling out its fourth mobile licence because of economic concerns after the rebellion that toppled the former president Hosni Mubarak in February.
While analysts point to strong growth potential in the local telecommunications market, some question the economic viability of launching another mobile licence in the country.
"There are a lot of changes in Egypt now and we are not sure whether launching a new licence at this moment is the right decision from the economic point of view," Dr Magued Osman, the communications minister, told Bloomberg News.
Telecom Egypt, the incumbent fixed-line telephone monopoly, has been trying to increase its exposure to the country's growing mobile phone market.
It holds a 45 per cent stake in Vodafone's Egyptian operations, and may consider rebidding for the remaining stake should the fourth mobile licence not be issued, Bloomberg News reported. Previous talks over a buyout by Telecom Egypt broke down last year.
The existing operators in the domestic mobile market are Mobinil, Vodafone and Etisalat. Analysts question whether a fourth mobile licence will prove profitable.
"The financial viability of the fourth licence is a very difficult case. Already the third operator faces difficulty in gaining market share," said Santino Saguto, a partner at the consultancy Value Partners. "Probably the licence value would not be very high in any case."
However, Mr Saguto said it made sense for Telecom Egypt to seek a mobile licence. "As a fixed-line operator, they understand that mobile is an area of future growth. It's in the interest of any incumbent fixed-line operator to have access to a mobile licence."
Mobile phone penetration in Egypt is about 75 per cent, according to another analyst, quoting the local telecoms regulator.
This is much lower than in other countries, especially those in the Gulf, where many consumers have two or more mobile connections.
Lower tariff rates and a strong appetite for mobile broadband is forecast to drive growth in the mobile sector, said Mr Saguto.
"There is definitely growth potential toward 100-130 per cent mobile penetration," he said.
* with agencies