Forbes Middle East
Adel Hamed, Managing Director and CEO of Telecom Egypt, reveals how the company is investing in upgrading Egypt’s lagging internet and mobile services, ploughing over $764 million into improvements and expansions in 2020.
Ayear ago, as the world went into lockdown, borders closed, and social restrictions became the norm to curb the spread of the COVID-19 pandemic, telcos found themselves under the spotlight, with the crisis proving just how vital digital services have become in keeping societies connected.
“2020 has been one of the most challenging years for businesses and individuals worldwide,” says Adel Hamed, Telecom Egypt's Managing Director and CEO. “Our network investments in preceding years have allowed us to cope with the unexpected increase in data demand and provide the best quality mobile and fixed data services to our growing customer base.”
The Egyptian telco saw its revenues hit $2 billion in 2020, a 24% increase compared to 2019, with $312.5 million in net profit, a 10% increase compared to the year before. Competitors have seen similar success. Etisalat Misr recorded a 22% increase in revenues in 2020 to hit $1.1 billion, while Orange Egypt's revenue climbed by around 7% to nearly $1.1 billion. Vodafone Egypt,
in which Telcom Egypt owns a 45% stake, generated revenues of $447.9 million in the third quarter of the 2020/21 financial year, an 8.8% increase compared to the same period in 2019.
For Telecom Egypt, the additional funds have meant more investment into a promising emerging market. Hamed says the company poured $764.1 million into improving the quality of internet services in Egypt last year, bringing the total value of the company's infrastructure investments over the past five years to $2.9 billion. “These investments have led Egypt's average internet speeds to more than double, reaching 35 Mbps by the end of the year,” says the CEO. “Given our plan to become a total ICT provider, we are heavily focused on delivering premium quality internet services in Egypt to pave the road towards new waves of technological evolution.”
“Telecom Egypt is looking at expansion into urban communities that are expanding beyond greater Cairo and Alexandria,” says Mariam Wael, a financial analyst at Pharos. “Its dedicated expansion plans during 2021 to new cities that the government is looking at—similar to New Alamien, New Ismailia, and New Portsaid—are likely to attract more customers in the future.”
This commitment to improving services in Egypt is the latest development for the expanding company since it entered the mobile services arena in 2017. Telecom Egypt acquired a 4G mobile license in late 2016 and launched its mobile business a year later. Since then, it has used heat maps to expand its network in key traffic areas. By the end of 2020, it had built 1,800 sites, carrying more than 30% of its data traffic. Today the telco has over seven million mobile customers, grabbing almost 7% of the mobile market in just four years. “Our market share is around 78% of the fixed data market. Average Revenue Per User for the 2020 financial year came in at $2.16 for fixed voice and $8.47 for fixed data—a growth of 9% and 20% respectively,” reveals Hamed.
The mobile market in Egypt and the wider Middle
“2020 has been one of the most challenging years for businesses and individuals worldwide.”
East is full of opportunity. By the end of last year, nearly 280 million people in the Middle East (45% of the population) were expected to be connected to mobile internet, according to a report by mobile operator lobbying group GSMA. Mobile technologies and services contributed 5.7% to GDP in MENA in 2019, worth $244 billion in economic value. But while Egypt's telecom market has significant potential growth, it also faces challenges. In Speedtest's Global Index for January 2021, Egypt was ranked 102 out of 140 countries for mobile speeds and 95 out of 175 countries for fixed broadband speed.
When it comes to improving these services for the future, Telecom Egypt is now investing further. It has committed to spending approximately $150 million over five years to grow its data centers business, and it acquired 20MHz of spectrum in the 2600MHz band in November 2020 for $305 million, which the CEO believes will help improve efficiency. “The new spectrum is expected to support us in absorbing more data traffic growth in our network, increase our geographical roll-out footprint, and improve our cost structure,” he explains.
“Telecom Egypt bets mainly on fixed broadband services which was the main driver in last year's revenue growth,” says Mohamed Magdi, a financial analyst at Beltone Financial. “It has been working on deploying fiber cables to accelerate the internet speeds since 2017, and when the health crisis erupted it was ready to accommodate the unprecedented demand.” This kind of innovation is helping the company play a key role in expanding Egypt's capabilities, including laying the ground work for the country's New Administrative Capital, deploying a state-of-theart ICT infrastructure made up of fiber optic cables for ultra-high-speed connectivity. “The network infrastructure sets the ground work for a wide array of smart and security services, enabling the provision of IoT solutions,” says Hamed. The network's design has now been finalized and the company has begun the first phase of the project.
And with the company rapidly expanding its digital footprint, the CEO stresses that it is well-prepared to launch 5G technology once Egypt catches up with the region. Although 5G technology has already debuted in Bahrain, Kuwait, Oman, Qatar, the U.A.E., and Saudi Arabia, Egypt is lagging behind. “It is unclear when 5G will be licensed in Egypt, but a lot of our investment is in 5G enabled solutions so that we are ready when the time comes,” says Hamed.
“We view internet connectivity as the base of digitization.”