Telecom Egypt to Get Mobile License for $359 Million

(Corrects Vodafone fee in 10th paragraph of story published yesterday.)

Telecom Egypt Co. will have to pay 2.5 billion Egyptian pounds ($359 million) for a unified license giving the country’s landline monopoly the right to offer services over competitors’ mobile-phone networks.

At the same time, mobile operators Vodafone Egypt, Orange SA (ORA)’s Mobinil and Emirates Telecommunications Corp.’s Etisalat Misr will be charged 100 million pounds each for a unified license giving them the right to use Telecom Egypt landlines, Telecommunications Minister Atef Helmy said at a press Conference in Cairo today. Telecom Egypt’s license will last about two years, until the state sells new 4G mobile spectrum.

Under the license regulations, a state-managed company will be started to establish and rent telecommunications infrastructure and the four operators will be allowed to participate in it. Mobile operators are still studying legal and financial conditions of the license, Helmy said. The unified license will be activated before June 30.

Under the rules, Telecom Egypt, which is 80 percent owned by the government, will have one year to negotiate an exit from its mobile joint venture with Vodafone Group Plc. (VOD) Telecom Egypt has a 45 percent holding in the unit. Vodafone has expressed interest in buying that holding, while Telecom Egypt has said it wouldn’t be obliged to exit the joint venture and it may buy a controlling stake when 4G spectrum is offered.

Vodafone Threat

On March 4, Vodafone said it would consider international arbitration if the Egyptian government approved the rule giving Telecom Egypt access to the country’s mobile networks. At the time, Etisalat Misr said it would seek negotiations and dialogue, and arbitration would be the last resort if the license were issued without fair and transparent rules.

“There will always be different point of views in business,” Helmy said. “However, what we reached today was done with complete fairness and professionalism.”

Representatives of Etisalat and Newbury, England-based Vodafone declined to comment when contacted by Bloomberg News today. Tom Wright, a spokesman for Orange, confirmed the company had received the documents. “We are currently looking at these and will establish our position following a complete analysis of the terms and conditions,” he said in an e-mail.

Mobile carriers have complained that the unified license only gives them limited access to Telecom Egypt’s older, copper network, rather than its high-speed fiber broadband. Mobile operators will have to rent fiber cables from Telecom Egypt if they want such access or establish their own through the new infrastructure company, Hesham El Alaily, executive president of Egypt’s telecommunications regulator, said today.

“I don’t want to hear the language of threats any more,” Helmy said. “We are sure our position is right and of its benefit to both the operators and Egyptian citizens.” He said the new license will double the size of the telecommunications market within seven to 10 years.

International Services

Vodafone will have to pay 1.8 billion Egyptian pounds if it wants to provide international gateway services, which connect calls across borders, when they are offered in June 2016, the regulator said in a statement handed to reporters today. Mobinil will have to pay 1.5 billion pounds, while Etisalat Misr, which already has a gateway, will pay 8 pounds per subscriber.

Telecom Egypt rose 2.8 percent in Cairo today before its trading was suspended pending responses to inquiries.

The company’s net income rose to 2.96 billion pounds in 2013 from 2.62 billion pounds in 2012, even as home fixed-line subscribers fell to 5.7 million from 6.24 million.

To contact the reporter on this story: Tamim Elyan in Cairo at telyan@bloomberg.net

To contact the editors responsible for this story: Tarek El-Tablawy at teltablawy@bloomberg.net Robert Valpuesta, Mark Beech

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