4G licence will not force Telecom Egypt to sell Vodafone stake

CAIRO (Reuters) - Telecom Egypt ETEL.CA will not be required to sell its stake in Vodafone Egypt VODE.CA following the introduction of fourth-generation mobile phone services, two telecommunications sector sources told Reuters on Thursday.

A Telecom Egypt building is seen at the Smart Village in the outskirts of Cairo, Egypt, October 27, 2015. REUTERS/Asmaa Waguih

The landline monopoly owns a 45 percent stake in Vodafone Egypt but hopes to offer mobile phone services itself following the introduction of high-speed 4G mobile technology in Egypt.

The government announced in 2014 a plan to introduce 4G and at the time said Telecom Egypt would be allowed to offer mobile services if it paid 2.5 billion Egyptian pounds ($282 million) and sold its Vodafone stake within a year of offering the services.

“The telecommunications regulator is not forcing Telecom Egypt in official correspondence over its application to offer 4G services to get rid of its Vodafone stake,” one of the sources told Reuters.

Telecom Egypt said earlier this week it was studying the terms in detail ahead of applying for the 4G licence.

“Telecom Egypt will not keep its stake in Vodafone long term after it offers mobile phone services but will sell when it gets an offer for a good price,” a second source told Reuters.

Egypt is selling the 4G licences as part of a long-awaited plan to reform the country's telecoms sector and the regulator has confirmed it has approached the three companies that currently offer mobile services - Orange Egypt EMOB.CA, Vodafone Egypt, and Etisalat ETEL.AD - about buying them.

The reforms will allow Telecom Egypt to enter the mobile phone market directly, while allowing mobile operators to offer fixed line services, ending its domination of the sector.

“Telecom Egypt will be obliged to pay 7.08 billion Egyptian pounds, half of which it has to pay in dollars, to get the 4G licence in addition to second and third generation services which it will offer through agreements with other companies,” a third source told Reuters.

All four companies have to submit applications for the licence by the first week of August. The mobile operators will also be able to apply for landline and international gateway licences.

The government says a unified licence will put all four telecoms companies on an equal footing and end monopoly, as well as increase state revenues.

($1 = 8.8799 Egyptian pounds)

Reporting by Ehab Farouk; Writing by Ahmed Aboulenein; Editing by David Clarke and Mark Potter