VODAFONE TO BID FOR INTERNATIONAL GATEWAY LICENSE IN EGYPT

Telecoms

Vodafone Egypt (VFE) has unofficially announced its decision to bid for one of the two international gateway operators' licenses to be offered by the National Telecommunication Regulatory Authority (NTRA) by the end of this year.

The move comes just days after the company's acquisition of 51 percent of Raya Telecom for LE 104 million and amid speculation of a conflict brewing between NTRA and VFE as the former has already said the two existing mobile operators will not be allowed to enter the bidding for the international license. The authority did not include the winning consortium of the third mobile license led by UAE's Etisalat.

"If the third (mobile) operator is going to be allowed to bid, we feel it's our right to get a similar license," says VFE Corporate Affairs Director Omar El Sheikh.

Etisalat Chairman Mohammed Omran has already made clear his company's intentions to apply for one of the two international licenses.

Although NTRA had promised to release fees, pre-qualification and bidding conditions for international license bids as early as January 2006, none have been released yet. The authority now says conditions will be released by the end of this year. One NTRA official told the financial weekly Al Mal bidding conditions will be release in October.

Telecom Egypt's (TE) monopoly on international calling operations ended in December 2005. The company collected LE 2.3 billion in international calling revenues, or 27 percent of total revenues of LE 8.5 billion in 2005. International calling revenues include incoming international calling fees, mobile international traffic via its 25 percent share in VFE and fixed international calling traffic via its network.

In comments made by several NTRA officials, including Chairman Amr Badawi, the authority made clear neither of the existing GSM operators will be allowed to bid for international operations. No clear reason has been given by NTRA, although in one statement the organization said one of the goals of liberalizing international communication was "conveying international experience of Egyptian companies in the field of international cables construction, operation and maintenance."

The Daily Star Egypt made repeated attempts to contact several NTRA officials including Badawi and Vice Chairman Sherif Ginena but none were available as of press time.

While most analysts believe VFE's recent acquisition of Raya puts the company in a better technical and legal position to pursue an international license, El Sheikh says denies the move was made with that intention.

"Our acquisition of Raya was mainly aimed at providing our enterprise customers with total solutions in voice and data," says El Sheikh.

El Sheikh declines to disclose how much VFE plans to spend on infrastructure development should the company be granted an international license, but says the figure is already included in the company's announced annual network upgrading budget, set at LE 1.7 billion for this year.

"An international license will help us expand and diversify our services in order to better meet the needs of our clients," El Sheikh says. "We are looking forward to getting an international gateway license to provide our customers with the best quality in international communication."

Though legally expired, he says, TE's existing monopoly has kept quality low and prices high for years. He says the two offered licenses will introduce competition to reverse both trends. Still, it is unclear how NTRA will keep Vodafone out of contention if Etisalat is allowed to bid.

"I think 3 billion makes a case," says one senior market analyst who declined to be identified. He spoke in reference to the $2.9 billion paid by Etisalat's consortium for the third mobile license.

The possible conflict comes on the heels of the ongoing dispute between NTRA and Mobinil over the latter's recent commercial introduction of Enhanced Data for GSM Evolution (EDGE) technology without a license. EDGE allows users to transfer data at six times the speed of GPRS. While NTRA classifies the technology as third generation, a license worth LE 3.3 billion, Mobinil argues it is 2.75 as proclaimed by the GSM Association, an international support body, which requires no additional licensing. Earlier this month, Mobinil agreed to suspend EDGE services until the dispute is resolved.

Daily Star