IHS Global Insight Perspective | |
Significance | The licence is the first in the country for triple-play services. |
Implications | Competition from a second player will begin as soon as a second licence is offered this month. |
Outlook | If the service is successful and operators are able to offer more innovative services, it is likely that further licences will be considered. |
The Egyptian minister of communications and information technology, Tarel Kamel, has announced that a triple-play licence has been offered to the Vodafone-led consortium, Teletech—the first offered in the country, Daily News Egypt reports. According to the source, a second licence will be made available this month to an Orascom Telecom (OT) and MobiNil-led consortium, called Link, which will offer cable, telephone, internet, and voice services in residential areas. The initial invitations for the bids were announced in October 2009 and licence terms were recently extended to 15 years from the original 10 years. Kamel is expecting the licences to bring in US$1 billion in investments within five years. He added, “During the last 12 months the mobile market has been maturing. The board for regulatory authority is no longer part of any pricing decisions and for the first time there is full competition between Egypt’s three operators.”
Outlook and Implications
The licences are the first of their kind in Egypt and will offer a wide range of services to residents. The current consortia leaders, Vodafone and Orascom, will have a strong impact on service take-up as both are already strong players in the mobile market and will benefit from existing brand strength and advertising. Triple-play will provide typical services of voice, high-speed broadband, and television. The services are likely to lead to more innovative solutions among operators. With two operators being offered a licence within one month of each other, the market is already set to see some competition. Typically these services will be able to offer a wider variety of service differentiation. This is likely to be a strong reason for the entry of other operators if more licences are made available.
The two current operators are likely to target modern developments in and around the main cities as there will be easier access and an abundance of residents willing to spend money on the additional services. Triple-play is well suited for the Egyptian market as households tend to be larger, enabling the service to provide benefits for a wider range of people. Service limitations are likely to be in the vast number of rural areas where the cost of providing the service will be relatively higher than around the cities. Typically WiMAX services would be more suitable for this environment; however, the take-up of services in these areas is still likely to be low due to the lack of PC penetration there.
Whilst the fixed-line market has witnessed a slight decline, the number of mobile users has increased rapidly. All operators are now offering 3G services, which will also stimulate the demand for faster internet services at home. Broadband is currently the highest growth opportunity for Telecom Egypt, the incumbent operator; however, the new players will have a slight advantage over Telecom Egypt as they are also able to provide television services.