Egypt May Put Off Fourth Mobile License - Bloomberg

Egypt May Put Off Fourth Mobile License - Bloomberg


Egypt’s government may put off a fourth mobile-phone license following the ousting of the former regime, potentially prompting Telecom Egypt to consider a new bid for the rest of Vodafone Group Plc (VOD)’s local unit.

“There are a lot of changes in Egypt now and we are not sure whether launching a new license at this moment is the right decision from the economic point of view,” Communications Minister Magued Osman said yesterday in a phone interview.

Telecom Egypt, the fixed-line monopoly that owns 45 percent of Vodafone’s local unit, has said it wants to offer mobile- phone services and is prepared to acquire an existing operator if it can’t gain a wireless license. Vodafone, the world’s largest mobile-phone company, ended talks last June to sell the business after Telecom Egypt (ETEL) initiated negotiations.

“They were looking to sell previously,” said James Crawshaw, an analyst at Standard & Poor’s Equity Research. “It could be another boost for the shares if they can sell it for a good valuation,” he said, adding that Vodafone is focusing on selling its stake in Polish operator Polkomtel SA.

Vodafone has risen 31 percent in the last 12 months, compared with a 15 percent gain in the U.K.’s FTSE 100 benchmark index. Sanford C Bernstein’s Robin Bienenstock last year valued the company’s holding in Vodafone Egypt Telecommunications Co. at about 3 billion pounds ($4.8 billion).

Vodafone spokesman Simon Gordon declined to comment. Spokesmen for Telecom Egypt couldn’t immediately be reached.

‘All Options’

Egypt’s Telecommunications Regulatory Authority is studying the possibility of offering a fourth mobile-phone license, Al Ahram reported in April last year, citing Amr Badawi, executive president of the agency. The study will evaluate the impact of the proposed license on competitiveness in the Egyptian market, the newspaper said at the time.

The ministry is working with Telecom Egypt and the country’s three mobile-phone operators -- Vodafone, Mobinil and Etisalat -- and is considering “all options,” Osman said yesterday.

During the protests, which ended the three-decade rule of President Hosni Mubarak, Egyptian authorities cut Internet access and mobile-phone service and instructed operators to send out text messages on its behalf.
“This was a decision that has negatively reflected on all citizens in Egypt,” Osman said. The ministry is currently revising the law to make clear who is responsible for such a decision and aims to publish its draft within three weeks.

Emergency Powers

Vodafone in February said that the authorities can instruct the operators to send messages under emergency powers provisions and that the messages were not written by the company.

“We would like to be more specific in terms of identifying who should be in charge to take that decision if needed,” Osman said, adding that he’d prefer the president or prime minister to be responsible if the government needed to take over mobile services again.

Mubarak resigned on Feb. 11 after 18 days of mass rallies, handing power to the military, which suspended the constitution and announced plans to hold parliamentary and presidential elections this year. Egypt’s ruling military council said in March that it will continue to run the country’s affairs until there’s a new president.
Telecom Egypt, whose Chief Executive Officer Tarek Tantawy resigned last month, is seeking to offer mobile services in a country where about 95 percent of Egyptians are clients of a mobile-phone network. The local government owns a majority stake in the company.

Minority Asset Sales

Vodafone CEO Vittorio Colao has said that the company is focused on sub-Saharan Africa. When the company halted talks about the Egyptian unit last year, analysts said Vodafone didn’t have much negotiating power as there was only one bidder. 

Colao, who took charge in 2008, has sold minority assets to unwind some of the takeovers by his predecessors. Arun Sarin pushed Vodafone into markets such as Ghana and Turkey. Christopher Gent led Vodafone through a six-year $300 billion acquisition spree. 

Vodafone sold stakes in China Mobile, reduced interests in Japan’s Softbank Corp. and in April agreed to sell a 44 percent stake in French operator SFR for 7.95 billion euros to Vivendi SA. The sale brought the total value of Vodafone’s disposals to about $22.8 billion since September. 

To contact the reporter on this story: Jonathan Browning in London jbrowning9@bloomberg.net.
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net