Share Square: Egypt

Egypt has a population of 85.3 million¹ and is served by 3 mobile network operators: Vodafone, Etisalat Misr and Mobinil². With 93.7 million subscribers, penetration stands at 110%, and has grown almost 7% over the past 12 months³. All three operators offer advanced 3G services.

The Egyptian National Telecommunication Regulatory Authority (NTRA) awarded a licenses to Alkan, EEC Group, HOI-MEA and Mobiserve Holding, under the name MobiTower, to implement and deploy tower sharing infrastructure. There are now four tower infrastructure license operators in Egypt and it will be interesting to see whether MobiTower, or possibly one or more of the three other licensees, will focus on a build-to-suite business model (building towers to order) or seek to purchase the assets of one of the three mobile network operators.

At least part of the growth in new towers will come from a fourth mobile license, set to be announced by the NTRA in mid-2013. It is expected that this concession will be issued to Telecom Egypt - the fixed-lined provider in the region who also has a stake in Vodafone Egypt - who plans to launch an LTE network. The three incumbents are running trials of LTE networks in anticipation of 4G services.

Egypt is an attractive market for a tower operating company. Despite mobile penetration of over 100%, 3G penetration in Egypt is low, while the subscribers per BTS ratio is high (well over 6,000⁴), indicating relatively low Minutes of Use. With the mobile network operators keen to move subscribers to what are hopefully higher ARPU⁵ services, it is expected that 3G (and to a lesser degree 4G) will grow strongly over the next few years⁶: data from the International Telecommunication Union indicates that 3G handset penetration should exceed 50% by 2016⁷. This growth in 3G penetration and capacity will drive the demand for additional towers. Given the capex investment required by 3G and 4G deployment, the capex/ opex savings of tower deployment that a tower company can offer are compelling. 

It is the anticipated 3G growth that will provide the opportunity for a tower operating company with a portfolio of towers to focus on driving up their Lease Up Rate. The subsequent move to 4G is unlikely to contribute significantly to tower growth: the 4G macro layer will be rolled out mainly on existing 3G sites and much of the capacity expansion will be handled using small cells and micro sites located on buildings and street furniture.

Given such an attractive market for tower sharing it is almost certain that the other tower infrastructure licence holders will also look to offer or expand tower sharing services.

1. CIA World Factbook – data is estimate for July 2013

2. Mobinil is majority owned by France Telecom, with just under 94% of the shares, and Orascom, with 5%

3. Africa & Middle East Telecom Week (North Africa States Mobile Network Subscriber Statistics: 3Q 2012)

4. Data taken from number of base stations and subscribers for one of the three incumbents

5. ARPU: Average Revenue Per User

6. 3G Subscribers in Egypt to Grow Five Fold till 2012 by Shushmul Maheshwari

7. http://www.itu.int/ITU-D/arb/ARO/2012/ICTIndicators/Presentations/s3/S3-04.pdf