Etisalat scoops third GSM licence

07 July 2006

A consortium led by UAE-based Emirates Telecommunications Corporation (Etisalat) has been awarded the country's third GSM licence after submitting the highest bid of£E 16,700 million ($2,900 million) in a public auction on 4 July. Technical bids were submitted in May. Etisalat beat off competition from nine other consortiums including the local Telecom Egypt, Kuwait's MTC and South Africa's MTN (MEED 5:5:06).

The Etisalat consortium, which includes Egyptian Post Office, National Bank of Egypt and Commercial International Bank (CIB), is expected to sign the contract in August. As part of the agreement, the successful bidder will pay 6 per cent of future revenues to the government, double the original amount stipulated by the authorities. It has also committed to having a minimum turnover of $1,000 million, a subscriber base of at least 5 million and providing second and third generation services.

Although the roll-out strategy has still to be finalised, the network is scheduled to start operating by February 2007. Etisalat will also provide second and third generation services. Etisalat, which will control 70 per cent of the new firm, will invest about $1,000 million in setting up the GSM network.

The Etisalat consortium bid was the highest by a wide margin. The MTC consortium came in second at £E 14,200 ($2,466 million), with the Qatar Telecom (Q-Tel) consortium ranked third on price at £E 12,200 million ($2,119 million).

The long-awaited new licence will break the duopoly held by VE and Egyptian Company for Mobile Services (MobiNil). The National Telecommunications Regulatory Authority (NTRA) expects the number of GSM subscribers to increase to 35 million from 15 million by 2011. The Egypt licence represents the latest coup for the Abu-Dhabi-based operator. Over the last two years, the firm has had an aggressive expansion programme, winning Saudi Arabia's second GSM licence and more recently, auctions in Pakistan and Afghanistan. It has also submitted bids to acquire stakes in Armenian telco Armentel, Serbian GSM operator Mobi63 and has declared its intention to bid for the forthcoming sale of a 35 per cent stake in Algerie Telecom.

Speaking to MEED in January, Etisalat chairman Mohammed Hasan Omran said the company had set aside at least $5,000 million to invest abroad for the coming year. 'There is still plenty of growth for us in this region and the surrounding areas,' Omran said at the time.

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