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Thursday, 16 June 2016

Gov’t to charge c. EGP 22.2 bn for new telecom licenses, to make operators pay in both EGP and USD

And we have (unofficial) 4G license prices: An unnamed government source told Youm7 that the government is set to charge Telecom Egypt EGP 7 bn, Vodafone Egypt and Orange Egypt EGP 3.5 bn each, and Etisalat Egypt EGP 4.6 bn for both 4G and what we assume are more 3G frequencies. The operators will be expected to pay for 50% of the licenses in USD, said the source. Vodafone Egypt and Orange Egypt are also set to be offered EGP 1.8 bn a piece for international gateway licenses, said the source. Operators have the FX liquidity, the source said, adding that the prices are reportedly less than what the companies had anticipated. This flies directly in the face of Vodafone Egypt saying that paying for it in foreign currency would be “problematic” and would require it to tap the domestic banking system.

Earlier on Wednesday, an unnamed source told Al Malthe National Telecom Regulatory Authority was indeed planning on issuing 4G licences in a mixture of foreign and local currencies. This would not be in violation of existing telecommunications laws, the source noted, adding that “most countries in the world” issue licences in a basket of currencies “to attract new foreign investments.” Former assistant to the CIT Minister Khaled Sherif said issuing the licence in a foreign currency would boost foreign currency holdings domestically and that mobile operators “can pay for it” using their roaming revenues or through tapping their parent companies. We are not necessarily in agreement with the reasoning behind either of the suggestions.

Meanwhile, operators are seeking to contract consultancy companies to provide technical and financial evaluation of 4G licenses and detailed studies of potential revenues, sources told Al Borsa. The consultants will also offer licence pricing estimates. Mobile operator officials expect yearly investments in the local market to increase 25% to modernize networks and stations in preparation for 4G.

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