2009 Egypt - Telecoms, Mobile, Broadband and Forecasts

The global financial crisis has had an impact on Egypt’s telecoms sector in that it has led to the postponement of two major events: the licensing of a second fixed network operator, and the sale of a second tranche of shares in Telecom Egypt (TE). However, both of these processes have received strong interest from the capital markets and are expected to go ahead in 2009 or 2010.

The highly profitable TE is Egypt’s incumbent fixed network operator and also holds a share in Vodafone Egypt, one of the country’s three mobile networks. Its fixed network rollout, the fastest in the region, slowed in the first half of 2008 but reaccelerated in the second half of the year, while the rapid take-up of ADSL broadband services continued unabated.

Supported by forward-looking government programs, Egypt has become one of the leading Internet markets in Africa in terms of users, international bandwidth and services offered. The sector is highly competitive with more than 200 Internet and data service providers, which has led to some of the lowest prices for ADSL services on the continent and ADSL2+ services with up to 24Mb/s being widely available.

There will be a shift towards wireless technologies, following the first successful WiMAX deployments in the country. VoIP Internet telephony has been liberalised, and several companies are rolling out next-generation networks to provide converged IP-based voice and data services.

The country is well connected by several international submarine fibre optic cables in combination with a national fibre backbone infrastructure, and the international bandwidth market has been liberalised. An increasing demand for international bandwidth has led to the development of several additional submarine fibre optic cable systems to go online in 2009 and 2010.

Egypt was one of the first countries in Africa to launch 3G mobile services in 2007, following the award of the country’s third mobile licence the previous year. The record price that was paid for the licence indicates the potential that is seen in the Egyptian mobile market and the penetration rate has more than doubled since then to reach 53% in early 2009.

The mobile network operators – Orascom/Mobinil, Vodafone and Etisalat – have launched a wide range of advanced services and are set to become dominant players in the Internet and broadband market as well, following the launch of 3.5G HSPA mobile broadband services and the acquisition of controlling stakes in leading data and ISPs.

All of these developments reflect the ever-present convergence of fixed and mobile, voice and data services in Egypt. With mobile and broadband tariffs already among the lowest on the continent, operators will seek to streamline their operations and distinguish themselves from the competition by quality of service and introducing new services, in an effort to develop new revenue streams in an almost entirely prepaid environment with steadily decreasing ARPU.

Key highlights:

·         Forecasts for fixed-line, mobile, Internet and broadband market to 2010 and 2015;

·         Mobile penetration has broken the 50% barrier;

·         Fixed-line rollout has reaccelerated to almost 2,000 new lines per working day;

·         Second fixed-line licence expected in 2009 or 2010;

·         Major WiMAX rollouts expected following spectrum licensing review;

·         Second tranche of Telecom Egypt IPO expected in 2009 or 2010;

·         Consolidation in the ISP and data services provider sector;

·         Decreasing mobile and fixed ARPU with some of the lowest broadband and mobile tariffs in Africa.

DSL subscribers in Egypt – 2002 - 2008

(Source: BuddeComm based on MCIT, NTRA, company and industry data)

Data in this report is the latest available at the time of preparation and may not be for the current year.

The following notes provide some background to our scenario forecasting methodology:

·         This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.

·         The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.

·         All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.

For those needing high level strategic information and objective analysis on the telecommunications sector in Egypt, this report is essential reading and gives further information on:

·         Government policies affecting the telecoms industry;

·         Market liberalisation and regulatory issues;

·         Telecoms operators – privatisation, acquisitions, new licences and competition;

·         The largest and fastest growing fixed-line market in the region;

·         Internet and broadband development and growth;

·         Broadband pricing, fixed and wireless;

·         The fast growing mobile market;

·         Average Revenue per User (ARPU);

·         Mobile application and content developments.