VZCZCXYZ0005
PP RUEHWEB

DE RUEHEG #1928 2811645
ZNR UUUUU ZZH
P 081645Z OCT 09
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC PRIORITY 3803
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS CAIRO 001928 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR NEA/ELA AND NEA/EEB 
DEPT OF COMMERCE FOR IT MAS AND NTIA 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV PGOV EG
SUBJECT: NEW TELECOM LICENSES FALL SHORT OF ENDING TELECOM 
EGYPT'S MONOPOLY 
 
¶1. (U) KEY POINTS 
 
- Egypt is issuing new tenders for bundled voice and data 
services for the rapidly growing housing-compound market. 
The GOE expects $1 billion to be invested in these services 
over the next five years. 
 
- For the first time, the telecom tenders will be based on 
revenue-sharing agreements rather than large upfront license 
payments. 
 
- Though this is a positive step for deregulation, the GOE is 
maintaining Telecom Egypt's fixed line monopoly and granting 
it exclusivity in bundled services in the larger compound 
communities. 
 
¶2. (U) On October 1, the Egyptian Ministry of Communication 
and Information Technology (MCIT) and the National 
Telecommunications Regulatory Authority (NTRA) announced the 
tender for two new licenses for "triple-play" or "compound" 
services, the first of their kind in Egypt.  The licenses 
include the provision of bundled value-added services (voice, 
data, and internet) to Egypt's higher-income consumers 
located in gated "compound" communities. Bidding is open to 
both Egyptian and international competitors.  The licenses 
differ from previous ones as they are based on a 
revenue-sharing model rather than the model of a large 
up-front payment that has been used with all previous license 
offers.  These licenses require eight percent revenue sharing 
with the GOE and no "significant" upfront fees.  MCIT expects 
the investment by the new licensees to reach US $1 billion 
over the next five years.  The tender's closing date is 
January 12, 2010. 
 
¶3.  (U)  The new licenses will only cover small, gated 
communities in Egypt.  Specifically, the two new licensees, 
as well as Telecom Egypt, will be able to compete for housing 
communities with 50-5000 units.  However, Telecom Egypt will 
remain a monopoly to provide services to communities with 
more than 5000 units. 
 
¶4. (SBU) COMMENT: The addition of "triple-play" operators to 
the market could open the way to break Telecom Egypt's 
continued fixed-line monopoly.  Although Telecom Egypt will 
still operate in larger gated communities as a monopoly, 
Egypt's decision to open up competition within the smaller 
gated communities is a small step in the right direction. 
The CIT Minister Tarek Kamel has stated that the economic 
crisis has prevented MCIT from offering a tender for the 
second fixed-line license as previously planned.  However, 
MCIT actually postponed working on the fixed-line license 
prior to the onset of the economic crisis and has yet to set 
a projected timeline for when they hope to offer the new 
license tender.  While MCIT has made one positive decision, 
the hesitation to fully open up fixed-line services to 
competition means that Egypt is still far from full telecom 
de-regulation.  End comment. 
Scobey