Telecoms company signs 4G licence deal worth $484m

October 14, 2016 6:52 AM

Egypt is selling four 4G licences as part of a long-awaited plan to reform the telecoms sector

A logo is seen in a retail store of French telecom operator Orange in Bordeaux, southwestern France

Orange Egypt signed a licence deal on Thursday, paying $484 million to operate fourth-generation mobile phone services in the country of 90 million after the government agreed to offer it additional spectrum.

Egypt is selling four 4G licences as part of a long-awaited plan to reform the telecoms sector and to raise money for stretched government finances.

The country's three existing mobile phone operators - Orange, Vodafone and Etisalat - initially all turned down the 4G licences saying the amount of spectrum on offer was not sufficient to allow them to offer the service efficiently.

The regulator then announced that operators which paid for the licence entirely in dollars would be given priority in buying additional spectrum. U.S. dollars are scarce in Egypt due to a long-running economic crisis.

Orange Egypt, a subsidiary of French telecoms group Orange, said early on Thursday it wished to "renegotiate acquisition of a 4G license in light of new terms."

The regulator said the company had until October 23 to submit a formal offer but the chief executive of Orange Egypt signed a $484 mln deal on Thursday, receiving 10 megaherz of spectrum instead of the 7.5 initially on offer.

The head of Egypt's telecom regulator said Orange would pay half the licence fee in Egyptian pounds and had also acquired a licence to offer fixed line services for a further $11 million.

Telecom Egypt, the state's fixed-line monopoly, was the only company to take up the original offer, buying a 4G license in August for 7.08 billion Egyptian pounds ($797 million) to enter the mobile market directly for the first time. The company later offered to buy additional spectrum not acquired by other operators.

The regulator said it would reconvene on October 23 to discuss additional options for rolling out 4G services that include holding an international auction for the remaining licences and selling additional frequency to Telecom Egypt.

Kuwait's Zain, China Telecom, Saudi Telecom and Lebara KSA have all expressed interest in acquiring Egyptian 4G licences if the established companies bow out.

Egypt needs hard currency after burning through its foreign exchange reserves as political turmoil hit foreign investment and tourism since a 2011 uprising.