Virtual call - Al-Ahram Weekly

The Egypt telecommunications market is to receive an another mobile operator. a virtual, written Niveen Wahish despite more than 90 million subscribers, the mobile market of Egypt has not yet reached the saturation point

The regulatory authority of the National Telecommunications of Egypt (NTRA) last week approved in principle offer licensed only for a virtual network operator Mobile (MVNO). MVNO is a mobile operator that does not have its own spectrum and generally has no its own network infrastructure. Instead, it has trade agreements with existing mobile operators to buy minutes for its own customers. NTRA said that in three months the criteria and the conditions of the MVNO licence will be announced.

A company who will be watching this closely opportunity is Telecom Egypt (TE). For years he waited for an opening enter the market of mobile telephony as an operator. "Currently we cannot fully compete in the market," a source in Egypt Telecom who preferred to remain anonymous, said Al - Ahram Weekly. He explained that "clients want a set of solutions of a company and you can does not currently offer because it is not in the mobile business.".

In addition, according to Thomas Kuruvilla, General Manager of Office Middle East of Arthur D. Little, a comprehensive management of the firm advises the telecommunications industry, there is a growing global trend to "fixed mobile substitution", that the houses are abandon landlines and moving to become "only" campers. He pointed out that between 2008 and 2011, the number of subscribers of the fixed line in Egypt decreased to an average of 12 per cent, while mobile subscribers increased by 26%. The Egypt Telecom voice of income contribution has been particularly affected, having decreased by 31% of turnover in 2008 of 17% in 2011.

Kuruvilla believes that it is vital for TE to foot to capture growth in the mobile market, substitute for the decline in fixed voice revenues. This foot, he said, also would be the only operator offering fixed and mobile, providing a convergent offer, which provides a competitive advantage by targeting enterprise and consumer segments.

Currently owns you a 45 percent in Vodafone Egypt, which according to Abdel-Rahman El-Sawy, Professor of telecommunications at the University of Helwan, does not it say in the decision making process. In addition, the source to said you, "it is not a recognizable mark."

The existing mobile operators could display the new licence as a threat. "It will be cut into their profit margins," said El-Sawy. Kuruvilla, however, sees it will help existing mobile companies increase the overall use of their networks. He added that the MVNO would however be a threat, if it was roaming on the network of a competitor.

Alternatively, mobile businesses themselves can if apply for MVNO licence should the NTRA criteria and conditions. Kuruvilla, in other developed markets it is quite normal for operators run to MVNOs to target specific niches or nibble and it all by avoiding dilution of the main brand.

But the Egyptian market can deal with another operator when there is already more than 90 million mobile subscribers in the country? El-Sawy believes that the 90 million figure is misleading since Egyptians have often several lines. In addition, it considers that "the future is data, not voice." Voice will be available free of charge on data services. "That being the case, it considers that 60 per cent of the population has not yet a phone and 80 per cent is not data services. "The Egyptian market is still far from saturation."

El-Sawy added that he does not expect the MVNO simply act as a retailer for a mobile company. The winner of the licence, he said, will develop its own content to differentiate and attract customers.

Kuruvilla, says that the average of reference markets with MVNOS shows a part of the MVNO market average 13 percent. And with a participant of the market, the impact may be comparable to that of a fourth mobile operator, in some markets, showing an average of 11%, he said.

He added that market share of depends strongly on the nature of the operator. "A small player can focus on targeting a small market niche, so realize that of the small market size, so that a great player like TE with solid financial results, a base of existing customers and a broad distribution network can be a challenger in the market for existing mobile operators.".

In addition, "it is to target the right segment of customers," added the source of TE.

Kuruvilla, stressed that the success of the MVNO stories include football clubs and other associations that have on large scale. These entities have a strong brand loyalty, customers with specific needs and potentially also a good distribution network. They are able to offer exclusive services required by their clients, such as the live match, visualization, archiving of goals, exclusive club and player news and so on.

But 45 percent existing participation of TE in Vodafone Egypt is another issue that could ask questions. Kuruvilla believes that, given that 45 per cent is not a game of majority is not a problem. If you had a majority thus share a mobile operator and MVNO, which may have allowed for an unfair market advantage, by which an operator is able to exercise any influence or coordination with the MVNO detriment of others.

In the case moves you forward and is able to obtain a controlling interest in Vodafone Egypt, said Kuruvilla, the regulator should seek to inculcate measures ensuring the operational independence of the MVNO. These may include operational level directives in the licence that governs the relationship between the operators and the MVNO.

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