Orange SA’s Egyptian unit is set to become the country’s second 4G mobile-phone operator after acquiring an airwaves license Thursday, joining the state-controlled landline monopoly Telecom Egypt.
Orange Egypt will pay $484 million for 20 megahertz of 4G spectrum and $11.3 million for a virtual fixed-line license, Jean Marc Harion, chief executive officer of the unit, said in a press conference in Cairo. The company will pay half the amount owed in U.S. dollars and half in Egyptian pounds. Orange SA will finance the deal, Harion said.
The signing raises pressure on Vodafone Group Plc’s local unit and United Arab Emirates’ Etisalat Misr to apply for licenses as well. Vodafone, Etisalat Misr and Orange had refused the National Telecom Regulatory Authority’s license terms last month, citing insufficient spectrum. But the regulator earlier Thursday announced new terms, including calculating the value of 4G and fixed-line licenses in dollars and giving companies that pay the full amount in dollars priority in getting additional frequencies in the future. The regulator will meet on Oct. 23 to study options, including selling extra frequencies to Telecom Egypt and Orange Egypt, or offering the license in an international auction.
For the government, the deal brings in much-needed dollars to end a foreign-currency shortage that has crippled the economy.
“The only reason for our refusal before was not having enough spectrum to provide adequate services and that is what has happened now,” Harion said at the press conference.
Orange decided to postpone a decision on whether to acquire an international license, National Telecom Regulatory Authority Executive President Mustafa Abdul Wahid said at the press conference. Other operators have until Oct. 23 to request 4G license deals, he added.
“The modification does not address any of the mobile operators’ concerns on the licensing terms, especially in regards to frequencies, but rather the government’s need to secure foreign currency,” said Sarah Shabayek, lead telecom analyst at CI Capital. “The operators will probably resume talks and reach a compromise with the government because they need frequencies to improve network quality and if they don’t take it now they won’t get it later.”