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.
Table 1 provides an overview of the country's key economic parameters.
|Population (July '17)||
|Population Growth (AAGR)||
12.7% (2016 est.)
$12,600 (2016 est.)
|GDP real growth rate||
4.3% (2016 est.)
USD 2,588.3 mlllion
Source: CIA World Factbook
Egypt's telecom sector was 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. However the launch of 4G has seen universal licences issued, with all four operators being able to offer both fixed and mobile services.
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 2005 to 2017.
In the Egyptian mobile market, there is a close competition between two of the four mobile network operators in the country - Orange and Vodafone Egypt.
Figure 2 illustrates the market share of the operators in terms of their subscriber base for 4Q 2016. In January 2018 Telecom Egypt's initial subscriber data has yet to be published.
Source: Blycroft Publishing c. 2018
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 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.
In September 2016 Orange Egypt named Jean Marc Harion as its new Chief Executive Officer succeeding Yves Gauthier. Harion has some 25 years of experience in the telecom sector and since 2011 was Orange Belgium’s Chief Executive Officer. Previously he acted as the Chief Executive Officer of Orange Dominica for a 3 year period.
Table 4 provides an overview of the operator's key performance indicators.
|Subscribers (in Million)||32.90|
|Annual Revenue (Million) 2016||EUR 1,135 (USD 1,375)|
|Blended ARPU (USD)||EUR 1.30 (USD 1.58)|
Vodafone, along with a consortium of other international investors, obtained Egypt's second GSM licence in 1998.
Egypt service revenue grew by 22.8% in 3Q 2017 (Q1: 24.6%, Q2: 21.0%), as rising data penetration drove higher ARPU and it maintained customer base growth. Organic adjusted EBITDA grew 23.0% and adjusted EBITDA margin improved by 0.4 percentage points to 45.1% as revenue growth and cost discipline more than offset high inflationary pressures.
Vodafone reported that in 3Q 2017 Turkey and Egypt, after deconsolidating India, accounted for a third of Vodafone's AMAP region. It saw 21% growth in Egypt, where Orange saw growth of 7% and Etisalat 6%.
Table 5 provides an overview of the operator's key performance indicators.
|Subscribers (in Million)||42.13|
|Annual Revenue (Million) 2016|
|Blended ARPU (USD)|
Source: Vodafone Group
The following are some of the recent developments in the Egyptian mobile market:
The final terms and forms for 4G mobile broadband network licences were sent to the mobile network operators in August 2016, and the operators had until 22 September 2016 to accept them.
The decision to update the licence terms came after only fixed line incumbent Telecom Egypt accepted the original terms, with mobile operators Orange Egypt, Vodafone Egypt and Etisalat Misr having decided not to accept them. With the regulator keen to prioritise existing operators, the decision to revise the terms was taken, and the licences included additional frequencies, while there is no change in the pricing or the condition that 50 percent of the licence fee payment must be paid in US dollars.
Telecom Egypt posted a statement to the London Stock Exchange stating that it had signed the final mobile licence agreement with the National Telecommunications Regulatory Authority (NTRA) on 31 August, so allowing the state-owned fixed operator to establish, operate and manage its own 4G network to offer mobile services in the market.
TE was granted 4G spectrum of 2 x 5 MHZ in the frequency band 1800 MHZ and 2 x 10 MHZ in the frequency band 700 MHZ. It is to pay EGP 7.08 billion (USD 798.3 million), of which EGP 5.2 billion (USD 586.3 million) is to be paid up front. The remaining portion will be paid in equal instalments over the next four years.
TE was mandated to offer services within 6 months, and the initial licence period was for a 15 years. The operator has the right to renew the license for another five years, with a renewal fee up to EGP 2.0 billion (USD 225.5 million), to be paid in the fifteenth year.
TE subsequently sought overdraft facilities with a leading regional bank to fund up to half the up-front cost of the licence.
In mid-October 2016 Vodafone Egypt and Etisalat Misr signed for 4G licences. The Ministry of Communications and Information Technology (MCIT) confirmed the award of both licences in two separate press releases, revealing that Vodafone Egypt had agreed to pay EGP 335 million (USD 37.7 million) while Etisalat Misr is to pay EGP 535.5 million (USD 60.3 million).
The Vodafone Egypt licence includes 5MHz of LTE-suitable spectrum, while Etisalat secured 10MHz, accounting for the difference in the prices of the two licences. It is understood that the 4G deal also included the renewal of both Vodafone and Etisalat’s existing 2G and 3G licenses through to 2031.
Both MNOs also agreed to pay out for licences that will allow them to offer fixed line services over the infrastructure belonging to Telecom Egypt; these ‘virtual fixed line’ licences cost each operator EGP 11.26 million (USD 1.3 million).
Subsequently Orange Egypt also applied for a 4G licence after it failed to make a bid in the licensing auction in September. It did not submit a bid in the government auction in September as it did not agree with the terms on offer, and in particular, the spectrum available on which to mount the intended services.
Orange Egypt, in conjunction with Cisco Systems, in December 2016 said that it had completed two major strategic projects. Modernisation of the Orange Network IPMPLS Core and Main Datacentre Data Network Backbones and capacity upgraded, in preparation for 4G services, were said to have been completed. The projects took some 18 months from initiation to completion.
On 3 January 2017 the Consumers Protection Agency referred Orange and Vodafone for prosecution following what it described as advertising that was 'misleading consumers and providing them with false information' the governmental body said in statement. The two are accused of marketing 4G services which have had not been officially launched, with the National Telecom Regulatory Authority confirmed that the 4G service are not yet commercially available.
In April 2017 Telecom Egypt (TE) and Orange Egypt signed a Memorandum of Understanding (MoU) for a national roaming agreement under which TE will provide 2G, 3G and 4G services over Orange’s infrastructure. TE also concluded an MoU with Orange Egypt for the provision of its infrastructure transmission services. The EGP 2.5 billion (USD 137.9 million) deal will run for five years starting in 2018.
Telecom Egypt announced in June 2017 it would provide 2G and 3G mobile services using the Etisalat Misr network.
On 21 June 2017 the mobile network operators received the frequencies needed for the delivery of 4G. The National Telecom Regulatory Authority (NTRA) sent a letter assigning the frequencies to the MNOs that had acquired licences, namely Vodafone Egypt, Orange and Etisalat.
In December 2017 NTRA said that it was considering tendering new frequency bands for the four mobile operators once it is available for re-allocation. A tender process was expected to allow Vodafone, Orange, Etisalat and Telecom Egypt to bid competitively, although NTRA had also considered allocating bands separately to each operator, which would be an option if larger bands were released that could be easily divided.
The NTRA noted that two months after launching the 4G service, the number of users had exceeded 10 million.