BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Telecomunications sector of Egypt

We made significant changes to our internet and broadband forecasts, largely on the back of information provided on broadband developments. We expect internet growth to slow as users increasingly migrate to broadband services. Our own asymmetric digital subscriber line (ADSL) forecast for FY06/07, we believe to be on target, after the National Telecom Regulatory Authority (NTRA) announced that as of September 2006, there were 166,882 broadband users in Egypt, with estimates of 200,000 users by year end. Looking ahead, we would expect to see 310,000 ADSL users this year, on the back of greater efforts made by the regulator to encourage take-up, namely the reduction of reducing tariff rates by as much as 40% for the service, while simultaneously offering new services with lower rates but with limited downloading capacities. Having said that, we are unsure over claims that by year end-2007, there could be 500,000 ADSL users, given that accessibility to PCs and required hardware continues remains difficult.

The mobile market is on the threshold of seeing greater change, with the strongest 2006 performance seen in Q406 – 1.794mn net additions – a reflection of operators seeking to gain greater subscriber numbers ahead of Nile Telecom’s entrance in February 2007. Subsequent growth in the market is still difficult to predict, and will be easier to gauge once new services are launched in February 2007 – with service and network quality as well as applications offered an important factor in the third operator’s performance. In view of this, we have maintained conservative estimates of just under 28% by the end of this year.

Although third generation (3G) developments are not expected to make a presence until 2008, the decision taken by Vodafone Egypt to become the second operator to purchase a 3G licence after Nile Telecom, is indicative of the need to raise voice capacity on its network as it seeks to raise its subscriber base, given the market’s low penetration rates. Mobinil, however, has still not made up its mind over whether to seek out a 3G licence, although it may need to given that its average revenue per user (ARPU) is falling. Prepaid and blended ARPUs reported a fall of 10% year-on-year (y-o-y) to EGP38 and 18% yo- y to EGP68 respectively, with the exception being postpaid. Furthermore, a 3G licence may be necessary after Mobinil was told that enhanced data-rate for GSM evolution (EDGE) services could not be provided on its existing global system for mobile communications (GSM) licence. The offering of EDGE would enable the operator to raise ARPU levels.

Meanwhile, the threat posed by Vodafone Egypt has already been growing, with the operator not only seeing an increase in ARPU across blended, prepaid and postpaid users, but reflected in the net additions market, with the operator nearly claiming half (49.4%) over 2006. Furthermore, with Nile Telecom, Mobinil could also see its share of the market chipped away.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - Business Environment Rankings

Middle East & Africa

Egypt

Chapter 3 - SWOT Analysis

Egypt Telecommunications Sector – SWOT

Chapter 4 - Industry Forecast Scenario

Fixed-Line

Table - Egypt Telecoms Sector – Fixed-line – Historical Data & Forecasts

Internet

Table – Egypt Telecoms Sector – Internet – Historical Data & Forecasts

Mobile

Table - Egypt Telecoms Sector – Mobile – Historical Data & Forecasts

Chapter 5 - Macroeconomic Forecast

Private Consumption Picks Up At Last

Table: Economic Indicators

Chapter 6 - Country Snapshot: Egypt Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 7 - Competitive Landscape

Market Structure

Competitor Analysis

Table: Key Players: Egypt Telecoms Sector

Table: Selected Operators Financial Indicators

Key Players

Fixed-Line

Table: Regional Fixed-Line Penetration Overview

Internet

Table: Regional Broadband Penetration Overview

Mobile

Table: Regional Mobile Penetration Overview

Market Data

Fixed-Line

Internet

Mobile

Table: Egyptian Mobile Market, Active Subscriber Base (Q306)

Table: Egyptian Mobile Market, Net Additions (9M06)

Table: Egyptian Mobile Market Net Additions (mn)

Table: Egyptian Mobile Market ARPU* (EGP)

3G

Industry Developments

Chapter 8 - Company Monitor

Regional Case Study – Huawei Technologies

Huawei Technologies – Contract Sales (US$bn)

Major Contract Wins For Huawei Technologies in MEA

Operators

Telecom Egypt (TE)

Mobinil

Vodafone Egypt

Chapter 9 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Competitive Landscape for Middle East & Africa Telecommunications Reports: Sample of Companies Ranked

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Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of Middle Eastern and African Telecommunications Sources

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BMI's Middle Eastern and African Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include: