Egypt mulls international auction after operators spurn its 4G licence offer

Egypt said it will consider auctioning its fourth-generation (4G) licences on the international market after all three of the country’s existing mobile phone operators turned down an offer to acquire them.
Egypt, one of Africa’s largest markets, is selling four 4G licences as part of a long-awaited plan to reform the telecoms sector and raise much-needed dollars for depleted government coffers.
It gave the four companies already operating in Egypt priority, but the only taker was Telecom Egypt, the state fixed-line monopoly which needs the 4G licence to enter the mobile market directly for the first time.
The established mobile operators, Vodafone Egypt, Orange Egypt and Etisalat, rejected the deal, saying the terms on offer were not viable.
In light of the rejections, Egypt’s telecom regulator said yesterday it would consider other means of introducing 4G services to the country of 90mn, including an international auction.
“The options will be presented to the board of directors at its next meeting, in early October,” it said in a statement.
The rejections could leave the way open for Kuwait’s Zain, China Telecom, Saudi Telecom and Lebara KSA, which had all expressed an interest in acquiring Egyptian 4G licences if the established companies bowed out.
There was no immediate statement from those companies.
Vodafone Egypt said it had rejected the licence because it did not offer enough spectrum to operate 4G services properly. “Vodafone Egypt confirms that it would be ready to acquire a 4G licence if the terms and conditions can be revised,” it said in a statement. Orange Egypt also said it could not agree to the terms. Etisalat has yet to issue a formal statement. Sources told Reuters last month the three companies had also objected to terms requiring 50% of licence payments to be made in US dollars.
A senior Telecoms Ministry official told Reuters at the time the terms had been revised to include more spectrum but no change to the licence payment conditions.
Egypt needs hard currency after burning through its foreign exchange reserves as political turmoil hit foreign investment and tourism since a 2011 uprising.
Telecom Egypt was alone in acquiring its 4G licence for 7.08bn Egyptian pounds ($797mn) last month.
Analysts said while the telecom regulator could go for an international auction, both sides stand to gain more by resuming negotiations.
Telecom Egypt will have to share infrastructure with existing operators which, for their part, would be loath to see their market share diluted by the arrival of new players.
“We expect further negotiations to take place, since it is in favour of all parties involved,” Cairo-based Pharos Holding said in a note to clients.