China Telecom, Saudi’s STC Said to Show Interest in Egypt 4G

  • Kuwait’s Zain said to make request on 4G licenses last week
  • License talk may pressure existing operators to accept terms

State-run carriers China Telecom Corp. and Saudi Telecom Co. have expressed interest in acquiring 4G mobile-phone licenses offered by the Egyptian government, joining Kuwait’s Zain, which made an official request last week, a Communications Ministry official said.

China Telecom, that country’s third-largest mobile carrier, and Saudi Telecom, the biggest phone operator in Saudi Arabia, haven’t presented formal requests yet, said the official, who asked not to be named discussing private information. A Saudi Telecom official declined to comment. China Telecom didn’t immediately respond to requests for comment.

Interest in the 4G licenses by newcomers in Egypt may add to pressure on local units of mobile operators Vodafone Group Plc, Orange SA and Emirates Telecommunications Corp. to accept license terms before the deadline set by the government at the first week of August. State-run fixed-line monopoly Telecom Egypt has welcomed the offering as it eyes entering a mobile market.

The licenses would only be offered to new market players if current operators rejected the permits, the official said. Egypt has about 95 million mobile subscribers, according to the communications ministry.

Orange’s Egyptian affiliate was asked to agree to the terms of a 4G license by the first week of August. The price for Orange is 3.54 billion Egyptian pounds ($399 million), the company said.

China Telecom doesn’t have a 4G development plan in Egypt, the company said Tuesday in an e-mail.

A 4G license would broaden China Telecom’s revenue stream, said Steven Liu, head of research at China Securities International.

“Overseas revenue mainly comes from roaming and is almost negligible,” Liu said by phone. “If they were to acquire 4G licenses, it would be more of the goal to establish a presence than to compete toe-to-toe with European operators," Liu said by phone on Tuesday. 

China Telecom will probably have revenue of 347.5 billion yuan ($52 billion) this year, about 4.9 percent more than a year earlier, according to estimates compiled by Bloomberg.

New Rivals

The 4G licenses in Egypt replace an earlier plan that some mobile operators threatened to fight in international arbitration because of concerns that a new competitor would eat into their market share, the telecommunications regulator said at the time. The government has said that operators interested in the license will have to pay half of its value in U.S dollars at a time when the country faces its worst foreign currency shortage in years.

"I think all operators will apply for 4G license and the government won’t find enough reason to allow a new player in," said Sarah Shabayek, lead telecom analyst at Cairo-based CI Capital. "The goal is to help fund the government budget and at the same time ensure that the market is functioning properly."

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