Reported tower sale will spur 5G competition from the smallest mobile operator as it chases market share
Telecom Egypt has successfully obtained a license to operate 5G services after signing a contract with the National Telecom Regulatory Authority (NTRA). The operating licence, valued at $150m, will run for 15 years, although will not be automatically renewed.
Telecom Egypt’s CEO and MD, Nasr Eldin, said that 5G will boost operator’s revenues from data services over the next five years and will be rolled out in specific areas based on economic feasibility. The company has started the trial operation phase of the service in five locations, including its headquarters in the Smart Village, according to Daily News Egypt (DNE).
The CEO expects a trial period of three to five months before the service is launched commercially. He confirmed to DNE that around 50% of Egypt Telecom’s network is 5G-ready, needing only software updates. He added that around 8% of smartphones in the Egyptian market are 5G-compatible.
Nasr said that in June 2021, the Administrative Capital for Urban Development and Egypt Telecom set up the first shared 5G-enabled mobile tower in the New Capital. This shared mobile tower allows all four mobile companies to offer various mobile services through one tower, supporting legacy Gs, as well as 5G technology.
As of Q2 23, the Egyptian mobile market remains predominantly skewed towards the prepaid segment with high numbers of 2G, 3G, and 4G subscriptions. The market is shared between Etisalat, Orange, Telecom Egypt and Vodafone. Of these four operators, Vodafone has the largest subscriber base of 46.2m subscribers in Q323, and Telecom Egypt has the smallest, recording 12.5m subscribers in the same quarter. However, the latter operator has also been the fastest-growing, having only entered the mobile market in Q3 17
Tower boost to 5G plans
In order to further support growth, especially towards rolling-out 5G technology, Telecom Egypt is reportedly talking to tower companies about selling and leasing back 2,500 of its 2,800 towers. Three towercos were named as frontrunners: Helios Towers, IHS Towers, and Mobi Tower. The sale, according to Fitch company BMI, would increase the amount of free funds towards investments in 5G as a potential deal, set to close in Q124, is estimated to be worth USD250m (EGP7.7bn).
As a result of the sale, BMI said when 5G enters Egypt in 2024 the overall market will grow to 766,000 subscribers. By 2032, BMI estimates this will be 35.5m subscribers, even with 4G still being the dominant form of network connection, sitting at 93.7m subscribers.
“Upon a completed towers sale, we expect a potential improvement in Telecom Egypt’s free cash flow (FCF) position that will support the operator’s rollout of advanced connectivity, thus offering upside potential to our figures,” said BMI. “The sale of towers is also likely to improve Telecom Egypt’s quality of service, assisting growth in the total number of mobile phone subscribers, which we project will increase from 103.3m to 129.1m from 2023 to 2032.”
BMI believes the sale will mean Telecom Egypt will continue to take market share from the other three mobile operators as more funds for growth are allocated. Secondly, developments of 5G infrastructure in Egypt are likely to occur at a faster rate as Telecom Egypt invests more aggressively in the technology, consequently intensifying competition over advanced mobile connectivity as other operators follow suit.