UPDATE 2-Vodafone Egypt gets 3G licence for $586 mln http://today.reuters.com/news/articlebusiness.aspx?type=technology&storyID=nL22784814&imageid=&cap=
Mon Jan 22, 2007
(Adds analyst, Vodafone comment)
By Cynthia Johnston
CAIRO, Jan 22 (Reuters) - Vodafone Egypt (VODE.CA: Quote, Profile, Research) acquired a 15-year third-generation mobile phone licence for 3.34 billion Egyptian pounds ($586 million), Egyptian regulators and Vodafone said, in a move analysts said could help the company retain market share.
Egypt's National Telecom Regulatory Authority said Vodafone Egypt would also pay 2.4 percent of total revenues for the duration of the licence. Vodafone got the licence after talks with the government.
Analysts said the 3G deal will help Vodafone, one of two Egyptian mobile operators, hold on to market share after the expected entrance this quarter of a third operator, Etisalat <ETEL.AD> of the United Arab Emirates.
"We believe that Vodafone didn't want one of its competitors to have a sort of competitive advantage. So although it is a little bit expensive, or just expensive, it was a necessary step," said Walaa Hazem, telecoms analyst at Egypt's HC Securities Brokerage.
The cost of the 3G licence is linked to the $2.9 billion paid by Etisalat to operate Egypt's third mobile network, including 3G.
Egypt set the price the two existing operators must pay for a 3G licence at 20 percent of the total paid by Etisalat.
The regulator said Vodafone could start offering 3G services after Etisalat started its operations in Egypt, which are expected to begin by the end of the first quarter.
Vodafone said it would offer 3G services "shortly", and had been working to set up the necessary infrastructure before the deal was signed.
Analysts said the Vodafone deal was expected to put pressure on fellow mobile operator Mobinil (EMOB.CA: Quote, Profile, Research), which is embroiled in a licensing dispute with the government, to apply for a higher-bandwidth 3G licence.
Mobinil said in July that it would defer applying for a 3G licence for a year citing what it said were "unattractive" terms, but Egyptian media reported late last year that Mobinil was interested in a licence and was in talks with regulators to find ways to reduce the cost.
A Mobinil spokeswoman declined to comment on whether Mobinil was seeking a 3G licence.
"They will do it eventually," said HC's Hazem. "It is not going to be competitively correct to operate in a three-operator market where two operators have a competitive advantage of offering a service that you cannot offer."
He estimated the number of potential users of 3G services in Egypt at 1.1 million, or 70 percent of post-paid subscribers.
Shares in Vodafone Egypt rose 5 percent to close at 87.18 pounds, while rival Mobinil's shares gained 0.8 percent to 184 pounds.
($1 = 5.70 Egyptian pounds)
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