* Rejection opens way for international operators
* Thursday was deadline for companies to accept offer
* Vodafone Egypt says spectrum insufficient
(Recasts adding Orange, regulator statement, quotes, analyst)
By Ola Noureldin
CAIRO, Sept 22 Egypt said it will consider
auctioning its fourth-generation (4G) licences on the
international market after all three of the country's existing
mobile phone operators turned down an offer to acquire them.
Egypt, one of Africa's largest markets, is selling four 4G
licences as part of a long-awaited plan to reform the telecoms
sector and raise much-needed dollars for depleted government
It gave the four companies already operating in Egypt
priority, but the only taker was Telecom Egypt, the state
fixed-line monopoly which needs the 4G licence to enter the
mobile market directly for the first time.
The established mobile operators, Vodafone Egypt,
Orange Egypt and Etisalat, rejected the
deal, saying the terms on offer were not viable.
In light of the rejections, Egypt's telecom regulator said
on Thursday it would consider other means of introducing 4G
services to the country of 90 million, including an
"The options will be presented to the board of directors at
its next meeting, in early October," it said in a statement.
The rejections could leave the way open for Kuwait's Zain
, China Telecom, Saudi Telecom and
Lebara KSA, which had all expressed an interest in acquiring
Egyptian 4G licences if the established companies bowed out.
There was no immediate statement from those companies.
Vodafone Egypt said it had rejected the licence because it
did not offer enough spectrum to operate 4G services properly.
"Vodafone Egypt confirms that it would be ready to acquire a
4G licence if the terms and conditions can be revised," it said
in a statement.
Orange Egypt also said it could not agree to the
terms. Etisalat has yet to issue a formal statement.
Sources told Reuters last month the three companies had also
objected to terms requiring 50 percent of licence payments to be
made in U.S. dollars.
A senior Telecoms Ministry official told Reuters at the time
the terms had been revised to include more spectrum but no
change to the licence payment conditions.
Egypt needs hard currency after burning through its foreign
exchange reserves as political turmoil hit foreign investment
and tourism since a 2011 uprising.
Telecom Egypt was alone in acquiring its 4G licence for 7.08
billion Egyptian pounds ($797 million) last month.
Analysts said while the telecom regulator could go for an
international auction, both sides stand to gain more by resuming
Telecom Egypt will have to share infrastructure with
existing operators which, for their part, would be loath to see
their market share diluted by the arrival of new players.
"We expect further negotiations to take place, since it is
in favour of all parties involved," Cairo-based Pharos Holding
said in a note to clients.
(Additional reporting by Eric Knecht; Writing by Lin Noueihed;
Editing by Mark Potter and Susan Thomas)