Egypt was a presidential republic until February 2011, and is currently under military rule. The previous regime had been attempting to introduce economic reforms and modernise its economy by emphasising important sectors, such as infrastructure and communications.
Egypt's economy revived after the 1990s, with the liberalisation of the economy and successful measures taken by the government to curb terrorism and thereby establish political order in the country. However, this economic growth declined significantly from 5.4 percent during 1996-2000 to 2.7 percent during 2001-2004, primarily due to regional political instability, coupled with the government's inflexible monetary policies and the presence of a thriving foreign currency black market. Consequently, the Egyptian pound had a sharp fall of 45 percent against the US Dollar during 2001-2004. The availability of only limited arable land and overdependence on the river Nile also hampered sustained economic development in the country.
A large source of the country's revenue is the export of crude oil and petroleum, and manufacturing activities, such as cotton textile production.
The government has initiated the process to restore the economy by introducing various economic reforms in mid-2004, such as proposals to slash income tax and corporation tax, a reduction in energy subsidies and the privatisation of a number of enterprises.17
Table 1 provides an overview of the country's key economic parameters.
|Population (July '10)||
|Population Growth (AAGR)||
|GDP real growth rate||
Source: CIA World Factbook
Egypt's telecom sector is one of the fastest growing markets in Africa in terms of absolute subscriber numbers. The country's telecom market was first opened to competition in 1997, when two operators were granted permission to provide public payphone services, and has since witnessed rapid growth.
The country's mobile sector is now completely privatised and the private firms have been allowed to offer Internet services as well. The only exception is fixed telephony, which is largely dominated by the partially privatised operator - Telecom Egypt (TE).
The National Telecommunication Regulatory Authority (NTRA) is the official telecom regulatory body of the country.
Table 2 provides an overview of the country's telecom sector in terms of subscriber numbers and penetration rates.
Figure 1 illustrates forecast growth in total subscribers and penetration in Egypt for the 10-year period from 2002 to 2011.
In the Egyptian mobile market, there is a close competition between two of the three mobile network operators in the country - MobiNil and Vodafone Egypt.
Figure 2 illustrates the market share of the operators in terms of their subscriber base for June 2005.
Source: Blycroft Publishing c. 2011
From 2003 telecom regulator, NTRA, started assessing the possibility of ending the duopoly in the market by launching a third mobile network operator, thereby increasing competition and stimulating further growth in the market. In accordance with these goals, the regulator granted a GSM licence to Telecom Egypt (TE), the government-owned fixed-line operator. However, TE cancelled its plans to launch mobile services due to the unavailability of an international partner. As a result, TE returned the GSM licence to NTRA for a full fee refund. By year-end 2003, these frequencies were taken up by MobiNil and Vodafone Egypt for the expansion of their networks. This agreement was also accompanied by the government's affirmation of not launching a third mobile operator for at least two years. However, with the two-year deadline approaching its end, once again in 2005 the regulator indicated plans to grant a third GSM licence, which would include the permission to launch both 2G and 3G services. The licence was issued in March 2006.
Etisalat holds a 66 percent stake in the third operator, with six seats on the board, equivalent to two-thirds of the total seats. Its CEO was Saleh El Abdooli, having previously served as the network development manager for Etisalat in the UAE.
Etisalat launched both 2G and 3G mobile services in February 2007 using the 011 prefix. Etisalat paid some EGP 16.7 billion (USD 2.96 billion) for its 3G licence. The new network covered 70 percent of the country?s market on launch with a network of 400 base stations covering Cairo and four other major Egyptian cities.
MobiNil was the first operator in Egypt to launch mobile services on a GSM network in 1996. It upgraded its network to GPRS in 2003.
The three shareholder groups of MobiNil are Orange, Orascom and a public float. Figure 3 shows the latest ownership structure of the company.
The operator provides various value-added services, such as ring tone downloads, text messaging, MMS, video clips, greeting cards, etc. In 2005, a new 2.5G service called 'MobiNil Life' was launched by the operator to provide content downloads.
The operator's network covers 91 percent of the total populated area in Egypt.
Table 4 provides an overview of the operator's key performance indicators.
|Subscribers (in Million, Dec 2010)||30.225|
|Revenue (Million US)||1,793|
|Blended ARPU (USD)||5.25|
|CAPEX (Million USD)||353.9|
Vodafone, along with a consortium of other international investors, obtained Egypt's second GSM licence in 1998.
Figure 4 shows the latest ownership structure of the company. ,
Vodafone, like its competitor MobiNil, also launched its 2.5G (GPRS) services in 2003. It currently offers various services including pre-paid lines, SMS, data services, etc. In 2005, it launched BlackBerry services in the country to provide e-mail and Internet access and other advanced non-voice services.
The operator's GSM and GPRS networks cover approximately 98.5 percent of the total population of Egypt.
Table 5 provides an overview of the operator's key performance indicators.
|Subscribers (in Million, Dec 2010)||31,271|
|Revenue (Million US)||2,177|
|Blended ARPU (USD)||5.63|
|CAPEX (Million USD)||NA|
Source: Vodafone Group
The following are some of the recent developments in the Egyptian mobile market:
Technology Innovations and New Services
In January 2011 Telecom Egypt was reported as to be considering acquiring a licence as a Mobile Virtual Network Operator (MVNO). This would require the co-operation of an existing Mobile Network Operator (MNO), and this in turn is usually the smallest by subscriber numbers, so making Etisalat Misr the most likely candidate for such an approach. Etisalat had some 7.3 million mobile subscribers at the end of September 2010, representing an 11 percent share of the mobile market. This follows its approaches to acquire a larger stake in Vodafone in 2010 which were turned down.
In the closing weeks of 2010 Etisalat Misr announced that it had obtained an EGP 7.2 billion (USD 1.2 billion) syndicated loan to finance infrastructure expansion. The banks, which include National Bank of Egypt, Banque Misr SAE, and National Bank of Abu Dhabi, will provide 76 percent of the long-term financing in Egyptian pounds and the rest in US dollars, the company said. Emirates Telecommunications said in June it planned to invest EGP 8 billion to expand its network over the next three years. Etisalat is the country?s third-largest mobile operator.
The National Telecom Regulatory Authority (NTRA) in July 2010 approved two groups to provide triple-play services to residential compounds in Cairo?s suburbs which contain between 50 and 5,000 housing units. This followed NTRA?s announcement in October 2009 that it would license two geographically focused triple-play concessions. LINKdotNET Egypt recently sold to mobile operator MobiNil, and includes affiliates of local telecoms group Orascom Telecom. The other group was thought to include Vodafone Egypt.
The number of mobile subscribers was approximately 69.24 million at the end of 2010 with a corresponding penetration rate of nearly 81 percent.