Investing in Egyptian telecom

by david.nunes
Dr Amr BadawiIssue:Africa and the Middle East 2007
Article no.:3
Topic:Investing in Egyptian telecom
Author:Dr Amr Badawi
Title:Executive President
Organisation:National Telecom Regulatory Authority (NTRA), Egypt
PDF size:180KB

About author

Dr Amr Badawi is currently the Executive President of the National Telecom Regulatory Authority (NTRA). He is also a Professor of Electronics at Cairo University. Previously, Dr Badawi served as Senior Advisor to the Minister of Communications and Information Technology, where he handled the development of the telecom sector. Dr Badawi joined the Ministry of Communications and Information Technology, MCIT, after a nine-year tenure with GTE & General Dynamics as Program Manager. He also held several other technical positions in telecom sector support and the ICT programmes in Egypt. Prior to GTE he founded Telecomp International in Egypt. Dr Badawi has also served as Telecom consultant for several government and private entities, and as a development and systems engineer at Aydin Systems in California. Dr Badawi holds a PhD degree in Electrical Engineering from Stanford University, California and obtained both his MSc and BSc degrees in Electronics Engineering from Cairo University.

Article abstract

In the nine years since NTRA, Egyptís national telecom regulatory agency, was established, it has done much to liberalise the sector. The NTRAís chief concerns are to ensure the transparency and liberalization of the telecom market, guarantee fair competition, introduce universal service and protect consumersí rights. The NTRA is a key component in Egyptís drive to reform its economy by deregulating a number of sectors and stimulating the growth of the private sector to promote growth, employment and stability.

Full Article

ìTo encourage national and international investmentsÖ within free competition rules is, by law, by outlook, and by aptitude, the core mission of NTRA.î Nine years ago NTRA was a fledgling institution firmly set on the path of regulatory reform. It is now a robust, versatile and mature institution, apt to set and enforce the right policies at the right pace. NTRA is Egyptís national telecommunications authority, established to administer the telecommunication sector, ensure its transparency, liberalize the market, guarantee fair competition, introduce universal service and protect consumersí rights. The ideal that guides the activities of NTRA calls for it to become an active pacemaker within the telecom sector, building its capacity and the sort of reputation that allows it to be an independent and prudent arbiter among the different stakeholders in the sector: the industry, the state and the consumer. Moreover, NTRA operates within the regional arena, where the questions it addresses must be considered within the broader context of rapid global changes. NTRAís actions illustrate its commitment to foster and improve the state of the Egyptian telecom sector, and strengthen cooperation between market stakeholders to achieve the goal of bridging the existing digital divide. Starting in 1991, the Egyptian government instituted its Economic Reform Program that successfully transformed Egypt into a prosperous emerging market. The Reform Program aimed at stimulating the deregulation of various economic sectors including, in particular, the telecom sector. The implementation of this programme, brought about by a set of economic policies that stimulated growth and employment, reduced centralization and led to less public sector domination of the economy. Today, there is universal recognition that Egypt has become one of the most stable emerging markets. In 1999 the Ministry of Communications and Information Technology, MCIT, was established in order to develop and implement a complete strategy for Egyptís ICT sector. MCITís strategic objectives included establishing an information-based society and turning Egypt into an ICT hub in the region. To this end MCIT sought to comply with international standards, enhance development, promote liberalization and grasp investment opportunities. Telecommunications liberalization began the process of implementing a national goal in line with Egyptís general strategy to liberalize the economy. This liberalization of the economy is aimed at building Egyptís participation in the global economy by following the principles laid out within the framework of WTO regulations, and dictated by the worldís best market practices. As one of the founding members of the World Trade Organization, Egypt was an early signatory of the GATS. In 2002, it voluntarily acceded to the Basic Telecommunications Agreement, BTA, thus committing itself to dismantling any governmental monopoly for the provision of telecommunication services. Egyptís international obligations have been reaffirmed through the promulgation of the Telecom Act of 2003 (Law 10/2003), which further empowered the independent National Telecom Regulatory Authority, NTRA, and set definite timelines for liberalizing basic telecom services. The act also outlined the provisions by which Egypt pledges to safeguard the circulation of information and the protection of free competition, provisioning of universal service and protecting consumer rights. It also sets the rules for licensing new service providers and allocating frequency spectrum bands. The Telecom Act is another milestone in the liberalization of Egyptís economy in general. In addition, some of the other important laws worth mentioning here are the new Investment Law (Law 13/2004), the E-Signature Law (Law 15/2004) and the new Anti-trust and Competition Law, which was passed by parliament in January 2005. Foremost among the expected benefits of liberalizing the market are: ï improved access to information and communication infrastructure and technologies; ï promotion of international and regional cooperation through the encouragement of foreign direct investments; ï encouraging the design and production of affordable and easily accessible ICT equipment and services; ï support of research and development of new technology-based services for the benefit of all stakeholders; ï to promote the benefits of international trade and the use of e-business models in developing countries and countries with economies in transition; and, ï encourage the development of local content and software specific to the needs of local communities. The NTRA achievements within the context of deregulation are numerous. Chief among the achievements of NTRA in the fixed-line market was the unbundling of the local loop, and the licensing of Telecom Egypt, TE, the incumbent operator in December 2005. TE has started by privatizing 20 per cent of its shares and may continue to privatize 49 per cent more of its shares in subsequent stages. Liberalization of the fixed market allows for the development of the domestic payphone services as well as value-added services. In February 2006, NTRA issued a Request for Proposals, RFP, for a third mobile network in Egypt that would use third-generation technology, with the purpose of opening the market for competition. The results of the bid concluded with the licensing of a third mobile network for the Consortium of Emirates Etisalat, consisting of Egypt Post, the National Bank of Egypt and the Commercial International Bank, CIB, that provided the highest bid, namely 16.7 billion Egyptian pounds. The network started operating in May 2007. It will offer national roaming and number portability, and is expected to increase competition within the mobile market substantially. A number of steps have been taken to deregulate the Internet market in Egypt. NTRA approved new amendments to the countryís ADSL initiative in mid 2006, with the aim of increasing the number of ADSL subscribers to more than one-and-a-half million by 2007. The amendments include provisions to reduce tariffs by almost 40 per cent and, as well, to offer new services with still lower tariffs for plans that limit download volumes. Those amendments are coordinated with steps the NTRA plans to take shortly, to invite local and international consortiums to obtain licences to establish and operate an international gateway. The NTRA has also started licensing cable operators to build their cable system facilities to link the East with the West via Egypt. In contrast to the fixed-line voice services, payphone services were opened to competition in 1998 and there are currently three providers in this market, including Telecom Egypt. As part of NTRAís national Universal Service plan, there are still more opportunities for subsidizing this particular market segment. The NTRA is also keeping pace with the wave of convergence, which is now overwhelming the world. Egypt possesses a number of comparative advantages that positions it positively as a promising market for ICT and media convergence. Its infrastructure potential, talented ICT professionals, efficient service providers and empowering regulatory framework are only some of the factors that make the potential shift to a converged communications sector much easier. By deregulating the market and attracting investments, NTRA is paving the way for the steady growth of the industry. NTRAís responsibilities also include fostering market investment, monitoring all aspects of the Telecom market, frequency spectrum management and equipment licensing. NTRA strives to meet its responsibilities always keeping in mind Egyptís national interests, including its developmental and social concerns.

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