LONDON-The GSM (Global System for Mobile communications) market in Egypt took a positive turn at the beginning of the year with an invitation for bids to build and operate a second mobile network. Now as the year is ending, cellular competition is set to begin in the Egyptian market.
The GSM tender attracted the big names in telecommunications, including Motorola Inc., Vodafone Group plc and Millicom International Cellular S.A.-all keen to secure a slice of this lucrative market. Egypt currently has only about 85,000 GSM subscribers from the incumbent operator, but industry observers forecast 4 million total within the next five years. As part of the terms and conditions of the tender, the final winner would receive a 15-year license and in return provide a minimum of 85-percent national coverage within four years.
As bidding progressed, two consortia, led by U.K.-based Vodafone and Motorola of the United States, emerged the strongest contenders. Misrfone, the Vodafone-led group, eventually emerged on top by the end of first-quarter 1998 and became the country’s first privately licensed GSM operator.
MobiNil, the joint venture between Motorola and France Telecom, subsequently was awarded a 70-percent stake in the existing state-owned mobile network. At a cost of some US$514 million, MobiNil inherited a network at that time comprising 80,000 lines and a waiting list of some 20,000 people. According to MobiNil, its customer base is growing at a rate of about 20,000 per month.
By the end of August, MobiNil had awarded a US$60 million contract to Alcatel for GSM equipment and services aimed at further network expansion. The deal covers delivery of equipment such as mobile switches and microwave links. The project, to be carried out by the Alcatel Egypt division recently established in Cairo, will allow MobiNil to expand both its coverage and capacity. The operator hopes to have the capacity to serve more than 300,000 customers by year-end.
Commenting on plans for growth, MobiNil President and Chief Executive Officer Osman Sultan said, “We see the demand for mobile telephones in Egypt as being exceptionally dynamic.”
Faced with setting up a network from scratch, Misrfone, which since has changed its name to Click GSM, invited bids from Lucent Technologies Inc., Siemens A.G. and L.M. Ericsson to supply and install GSM equipment.
Click GSM this summer awarded a contract valued at some US$100 million to L.M. Ericsson for a turnkey GSM solution and related equipment. The project initially will reinforce the coverage of the carrier’s network in populated areas along the Nile, as well as provide network capacity in the Cairo and Alexandria areas. Coverage of other urban centers is set to follow.
Ericsson also is supplying its AXE switching system, intelligent network services, radio base stations, microwave radio mini link solutions, value-added services, and operation and maintenance services.
Speaking at the Financial Times 10th annual World Mobile Conference in October in London, Click GSM General Manager and CEO John Logan reported his company is due to begin service in the greater Cairo area by the end of November. By year-end, it will have an estimated 200,000-strong subscriber base, Logan said.
Royalties from the two licenses are expected to bring the Egyptian government well in excess of US$1 billion.
