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Telecom Egypt looks to settle disputes before entering mobile market
November 3, 2015 / 10:37 AM / 2 years ago

Telecom Egypt looks to settle disputes before entering mobile market

CAIRO (Reuters) - Its fiery former chief executive no longer at the helm, Egypt’s state-owned landline monopoly Telecom Egypt (TE) (ETEL.CA) says it is resolving longstanding disputes with mobile providers that may pave the way for the mobile license it has sought for years.

Under former CEO Mohamed Elnawawy, removed in May, TE planned to pay 2.5 billion Egyptian pounds ($311 million) for a 3G mobile license in a deal that would also involve existing mobile providers gaining entrance to the landline market.

But disputes between TE, the state and mobile carriers Mobinil EMOB.CA, Etisalat (ETEL.AD) and Vodafone Egypt (VODE.CA) stalled the reforms. TE owns 45 percent of Vodafone Egypt and the government had demanded it sell this before offering its own mobile services. TE refused.

With Elnawawy out of the picture, some analysts have speculated that 80 percent state-owned TE, may no longer seek to enter the mobile market.

But in an interview at the Reuters Middle East Investment Summit, new CEO Osama Yassin said he was seeking mobile access and was focusing on the planned rollout of high-speed 4G services set for 2016. Like his predecessor, he insisted mobile access should not be contingent on a Vodafone Egypt sale.

“We think it is our right to have a mobile license with the 4G frequency ... and we hope that we can preserve in one way or another our 45 percent stake in Vodafone,” Yassin said.

In the meantime, he said, TE is looking to improve relations and settle disputes with the mobile providers which it serves.

“I came and took an endorsement from the board to end ongoing problems with internet and mobile companies, so this is a new direction that should improve the performance of the telecom market generally.”

DIVIDEND PAYMENT

TE expects Vodafone Egypt to pay it some of the dividends withheld since 2012. At least 500 million Egyptian pounds of more than 2 billion owed will be paid by year-end, Yassin said.

He also predicted TE would soon settle a dispute over interconnection fees, which mobile providers pay TE when their customers call fixed-line numbers and vice versa, after years of litigation. TE said in 2013 it was owed 8.8 billion Egyptian pounds of such fees.

TE is looking to reduce the price at which it rents landline infrastructure to internet service providers by the end of 2015, said Yassin. Elnawawy had rejected such an idea.

The telecoms ministry said in August internet providers must reduce prices as part of a plan to increase internet penetration in Egypt to 50 percent by the end of 2016 from 34 percent.

But companies such as Vodafone, which compete with TE unit

TE Data in offering ADSL internet services, have long grumbled that the landline infrastructure rates offered by TE are far too high to reduce the prices they charge end users.

Here too, Yassin said there was room for compromise. “If I lower the price a bit and get more customers, I benefit and the companies benefit.” He added: “There has to be some return in exchange.”

Follow Reuters Summits on Twitter @Reuters_Summits

Writing by Eric Knecht; Editing by Andrew Torchia and David Holmes

Our Standards:The Thomson Reuters Trust Principles.
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