Orange CEO Yves Gauthier warned on Tuesday that a fourth mobile operator in Egypt could cause the country’s telecom market to shrink and harm investment.
Gauthier is concerned about the prospect of a mobile operator licence being awarded to Telecom Egypt, he told Ahram Online at a launch event in Cairo of Orange Egypt, formerly Mobinil.
“I hope that the government will evaluate the impact of granting a fourth licence, because all countries where there are four operators see their market contract due to pricing wars, with negative effects on investments,” said Gauthier, citing France, where Orange is in talks with Bouygues Telecom to buy it out.
Egypt, a country of 90 million where the mobile phone penetration rate exceeds 100 percent, has for years delayed a plan to award its only fixed line operator, majority state-owned Telecom Egypt (TE), a licence to become Egypt’s fourth mobile operator, as well as its fourth Internet Service Provider.
The plan has been criticised by mobile operators, who rely on TE’s infrastructure to provide the majority of their services at a fee, and who have complained of high costs as well as the fact that TE owns a 45 percent stake in market leader Vodafone Egypt.
Gauthier also questioned the fairness of the arrangement.
“In this case, they should offer us the fixed [licence], they should offer us the chance to lay our backbone [infrastructure], the fixed voice…you cannot give everything to somebody and just a little to the other,” he said.
Gauthier stopped short of threatening to resort to international arbitration, however.
“International arbitration is exaggerated, the government has the right to give the licence they want,” he said.
The CEO also pointed to Egypt’s current dollar crunch as a reason to reconsider the plan.
“I think it is prudent to analyse it beforehand, because if you give a fourth licence, the fourth operator has to build a network with materials from [abroad], so if the country does not have enough dollars, it is not the right moment to generate more imports.”
Orange Egypt, which became almost 99 percent owned by French multinational Orange one year ago and rebranded itself from Mobinil on Tuesday, is the second largest mobile operator in Egypt after Vodafone Egypt, with 33 million subscribers.
The third player is the Egypt subsidiary of United Arab Emirates-based Etisalat.
The remaining 1 percent of Orange Egypt’s shares are in free float on the Egyptian Stock Exchange.