Vodafone joins rivals in Egypt by signing 4G licence deal

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Vodafone Egypt on Sunday signed an agreement to acquire licences that will enable the operator to provide 4G and fixed telecoms services in future.

Reuters reported that the operator is to pay $335 million (€304 million) for the 4G licence and $11.26 million for the fixed licence.

Vodafone has thus joined local rivals Orange Egypt and Etisalat Egypt by agreeing to a new deal with the National Telecom Regulatory Authority (NTRA), after all three operators previously rejected the 4G licence terms.

One of the main points of contention was that the amount of spectrum on offer was inadequate. Indeed, the GSMA also previously raised concerns that sufficient spectrum would not be available “on terms that will encourage rapid and large-scale investments in 4G networks and services."

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Vodafone Egypt said the conditions of the 4G licence have now been amended and include additional spectrum assets that would “complement Vodafone’s existing strong spectrum holdings relevant to 4G.”

Stefano Gastaut, CEO of Vodafone Egypt, told a news conference that the terms are now “completely satisfactory to launch top quality 4G services,” Reuters reported.

Etisalat also signed a 4G licensing agreement on Sunday, while Orange Egypt agreed to the new deal last week. Reports said Orange is to pay $484 million for the 4G licence and $11.26 million for the fixed, while Etisalat has agreed to pay $535.5 million for the 4G licence and $11.26 million for the fixed.

Bloomberg noted that Vodafone secured 5 MHz and Etisalat 10 MHz of 4G spectrum. Orange Egypt said in a statement that it has been awarded 2 x 10 MHz of spectrum, “as previously requested.”

Although Vodafone’s award seems low compared to rivals, NTRA executive president Mustafa Abdul Wahid told reporters that additional spectrum is to be offered in less than a year. Daily News Egypt noted that Vodafone would be given top priority to obtain new frequencies once they were available. The operator plans to make use of its existing bandwidth, which now totals 42.5 MHz, to launch services.

Telecom Egypt, the state's fixed-line monopoly, has already agreed to buy a 4G licence that will enable it to enter the mobile market directly for the first time. In August, the operator agreed to pay EGP7.08 billion (€724 million/$797 million) and was thus the only one of the four operators to agree to the original terms.

The latest signings bring to an end a long-running saga over the allocation of new mobile and fixed licences and will also inject much-needed funds into state coffers.

One unresolved issue is the fact that Telecom Egypt still owns a 45 per cent stake in Vodafone Egypt. According to Bloomberg, Gastaut said he is confident that a potential conflict of interest here would be resolved in future. Options include selling the stake to the Vodafone Group.

Yves Gauthier, CEO of Orange Egypt, has also previously warned about the potential harm to competition of awarding a fourth mobile licence to Telecom Egypt. Egypt already has a mobile phone penetration rate of more than 100 per cent.