Monday, Mar 11, 2013
DUBAI (Zawya Dow Jones)--Telecom Egypt, the country's sole fixed line provider, plans to launch mobile services in the third quarter and will consider investing in a 4G network next year, according to the company's chief executive.
The telco is still in negotiations with the National Telecommunications Regulatory Authority about the price of a mobile licence, but the cost will be "modest", Mohamed Elnawawy, Telecom Egypt's managing director and chief executive told Zawya Dow Jones.
"The strategy is very simple," he said. "Customers want total telecoms. Telecom Egypt is a customer company and we want to be a total customer provider."
Egypt's telecom regulator announced in December it would allow Telecom Egypt, which is 80%-owned by the government, to join three existing private telcos, Vodafone Egypt, Mobinil and Etisalat Misr, in offering mobile services.
The regulator will also eventually allow private mobile companies to establish fixed-line systems on existing infrastructure owned by Telecom Egypt, which enjoys a monopoly on land lines.
Telecom Egypt will provide mobile services in the first year of operations by using the existing infrastructure of one of the current mobile operators, said Mr. Elnawawy.
It will concentrate on selling mobile packages to its current customer base of fixed-line and broadband customers, with a particular focus on the enterprise sector, he added.
Following a year of mobile operations, Telecom Egypt will consider bidding for a 4G, or long-term evolution, licence and roll out its own mobile network, said Mr. Elnawawy.
The telco will then reconsider its 45%-stake in Vodafone Egypt, because it would not provide value for shareholders if both Telecom Egypt and Vodafone Egypt were to invest in network infrastructure, he added.
Telecom Egypt doesn't expect to be forced to sell its stake in Vodafone Egypt for regulatory purposes and is expecting a decision on the cost of the licence in June.
"For the 4G licence, they will have to decide what to do with Vodafone Egypt," said Marise Ananian, an analyst at EFG Hermes. "They will have to sell or buy their 45% stake, because I don't think keeping it is an option. But it depends on Vodafone Group and whether they want to sell their 55% stake in Vodafone Egypt."
The 55% stake Telecom Egypt doesn't own in Vodafone Egypt could be valued at a ratio of four to six times enterprise value over EBITDA (earnings before interest, tax, depreciation and amortisation), in line with recent deals in the region, added Ms. Ananian, without giving an absolute figure for the stake.
Telecom Egypt's net profit for the full year fell 13% to EGP2.61 billion, while revenues increased 1.6% to EGP10 billion, the company said in a statement earlier Monday.
Write to Rory Jones at rory.jones@dowjones.com
Copyright (c) 2013 Dow Jones & Co.
(END) Dow Jones Newswires
11-03-13 1158GMT
