In a deglobalising world, governments are increasingly twitchy about foreign companies’ and governments’ involvement in critical national assets
The UK government has decided that the 14.6% stake in Vodafone held by the self-styled global technology company e& is a potential national security risk to the UK. e& had net profits of AED9 billion (€2.255 billion) in 2020. Its headquarters are in Abu Dhabi. The United Arab Emirates government has a 60% stake in the operator, the other 40% is publicly traded.
Under the National Security and Investment Act 2021, the UK Cabinet Office said a national security committee will be set up at Vodafone to oversee and monitor any sensitive work it carries out that could have an impact on national security. According to the government, the move is “necessary and proportionate” to “mitigate the risk to national security”.
Vodafone said in a statement that it was “pleased to have received clearance in our home market for our strategic relationship agreement with e&, and for e& to take a seat on our board”.
After scrutiny, acting under the National Security and Investment Act 2021, last year the government decided not to take any action about the debt-laden Altice Group’s 18% stake in BT. It is controlled by French billionaire Patrick Drahi. This could change.
His telecoms empire spans Israel, the US, the UK, the Caribbean and Europe. Drahi built it by acquisition when money was cheap. He is now wrestling with $60 billion debt and a corruption scandal in Portugal is not helping his appeal to investors.
According to Reuters last December, a fire sale of assets may not be enough to save him and that Drahi might need to find “a deep-pocketed anchor investor. Middle Eastern companies could fit the bill”.
The statement regarding e& and Vodafone was issued just hours after the UK’s Culture Secretary, Lucy Frazer, insisted on further regulatory investigation into RedBird IMI. Its £600 million bid for the right-wing newspaper, The Daily Telegraph, is backed by an investment group based in Abu Dhabi. A number of Tory MPs have expressed their misgivings about the bid.
The government appears to be sending out mixed signals regarding UEA. The Financial Times reports [subscription needed] that it is seeking to expand a “sovereign investment partnership” with UAE which was set up three years ago. It quotes unnamed sources saying UAE has already exceeded the £10 billion it pledged to invest in sectors including clean energy, tech and infrastructure.
Geopolitics and telecoms
Back in telecoms, the Spanish government recently bought roughly a 10% stake in the Telefonica Group to counterbalance the 10% or thereabout stake bought by stc, which is controlled by the Saudi government.
Telecoms’ global supply chain and equipment market has also been fractured by geopolitical strife. The US, UK, Australia, New Zealand, Denmark, France, Sweden, Estonia, Latvia and Lithuania have imposed bans on or are phasing out equipment from Chinese manufacturers Huawei and ZTE in national telecoms infrastructure, particularly 5G, on national security grounds.
The European Union is urging more to follow their example.
The loans from the European Investment Bank will fund R&D into wireless tech from last year to next year
Ericsson has signed two agreements for funding with the European Investment Bank (EIB) for a total of €420 million of which €250 million was handed over last December.
The vendor said that as well as strengthening its balance sheet and financial flexibility, the loans have been granted to finance R&D in wireless tech between 2023 and 2025.
Ericsson said these investments are an important contributor to achieving its Net Zero target by 2040 through reduced energy consumption in the mobile networks globally.
Carl Mellander, Ericsson’s CFO, says, “ This will benefit our operator customers as well as other industrial sectors in their efforts to create a positive impact.”
In December 2023, Ericsson signed a seven-year €100 million green funding agreement with the Nordic Investment Bank (NIB). The loan will also finance R&D investments in wireless technology.
On November 23, 2023, Ericsson announced the successful placement of a green Euro-denominated 500 million 4.5-year bond. The bond was issued within Ericsson’s Green Financing Framework, under the Company’s Euro Medium Term Note Program (EMTN).
The biggest shareholder in Italy’s incumbent operator takes its fight to the European Union’s competition authority
The French conglomerate Vivendi has asked the European Union’s anti-trust authority to investigate Telecom Italia’s (TIM) sale of its fixed infrastructure unit. Vivendi, which owns a stake of just under 24% and 17% of the voting rights stake in TIM, has fiercely opposed the plan to sell the so-called NetCo to private investor KKR for up to €22 billion.
The exact sum is uncertain as more than €2 billion of the price depends on certain financial criteria being met in future.
Vivendi insisted the asset was worth more than €30 billion and is worries that there is little value left in the rump of the business without the fixed network infrastructure.
In December, after TIM announced the deal had been sealed, Vivendi issued a writ against TIM’s board, which the board dismissed.
Invoking EU law
Now, according to Reuters, Vivendi has asked the European Union Directorate General for Competition tolook into the role played by the Italian Treasury in the NetCo sale process. The Italian government supports the sale.
Vivendi claims it was “unlawful”. Assuming its claim is not dismissed, this could hold up progress for years while an investigation takes place. KKR intends to notify the European Union’s antitrust authorities of its plans to buy Telecom Italia’s network assets by the end of January, Reuters reports.
TIM’s CEO, Pietro Labriola, was appointed to steer the deal through after years of turmoil in Telecom Italia’s boardroom. The operator desperately needs to reduce its debt mountain of about €26.3 billion. If the NetCo deal goes through, the operator expects to subtract about
€14 billion.
This could be even more if KKR can win TIM’s agreement to extend the deal to include Sparkle, the operator’s international infrastructure arm. In November, Reuters reported advisors for the operator and KKR discussed a valuation of around €750-800 million.
However, if the EU’s Directorate General for Competition wades into the melee, then this too is likely to be pulled into the DG’s net.
Niklas Heuveldop won the up-to-$15bn deal with AT&T so becomes the chosen one to sort out Ericsson’s platform business including Vonage
Ericsson has announced a significant executive reshuffle that will see current North American head Niklas Heuveldop to become the new head of the vendor’s global communications platform unit and CEO of Vonage. In December, AT&T has signed a deal with Ericsson for open RAN deployment across the US over the next five years that is worth up to $15 billion.
However, Heuveldop will have his work cut out convincing the world that application programming interfaces (APIs) can be profitable if 5G apps could be exposed to developers on the platform. Last October, Ericsson announced it would absorb a $2.94 billion non-cash charge in the third quarter to reflect Vonage’s falling value, despite paying €6.2 billion for the cloud-based communications platform-as-a-service (CPaaS) firm in November 2021.
Heuveldop replaces Rory Read, who will leave Ericsson at the end of the first quarter of 2024. Read had been CEO of Vonage since 2020.
“Niklas has proven himself in multiple roles on the executive team. Under his leadership we have significantly strengthened our position in North America, expanding our market share with all leading customers in the region and the industry-defining $14 billion deal with AT&T, creates a solid foundation for our business in the market for years to come,” said Ericsson president and CEO Börje Ekholm. “He is also an important driver of our ongoing organizational transformation, driving ethics, compliance and operational excellence.”
He added: “The Vonage acquisition and our investments in the global network platform are foundational to our long-term strategy execution, driving growth in both the enterprise segment, but also reinforcing our network infrastructure business.”
Thrilled but humbled
Heuveldop said he was “thrilled but also humbled to be offered the opportunity to ensure that we leverage Vonage’s capabilities and the 5G innovation platform to their full potential – it’s a once in a lifetime opportunity. I move on knowing that we have the best talent in the industry to serve our customers and Yossi will continue to strengthen our local capabilities.”
In a separate move, the current head of strategy, technology, marketing and business development in the US, Yossi Cohen, will replace Heuveldop to lead North America. Cohen will also be a member of Ericsson’s executive team and report to the CEO. A 22-year Ericsson veteran, his previous roles include head of customer unit Verizon, global head of radio sales and business management in Stockholm and head of global customer unit Softbank in Tokyo.
“Yossi’s deep understanding of technology and business strategy is crucial as we lead in the 5G landscape,” said Ekholm. “His expertise in fostering dynamic customer relationships and a progressive approach to technology will be key in shaping our future operations and maintaining our industry leadership. He has played an important role within our North American operations for the last seven years and I’m happy that he has accepted to take on this new role.”
A DDBR is a versatile device that can be deployed in IP core/backbone networks as an IP/MPLS core/edge routers (P/PE routers) or an Internet Gateway router (IGW). Compared to traditional routing solutions from a single vendor, a DDBR solution combines software and hardware from multiple vendors, allowing service providers to break vendor lock-in.
TIP said the RFI has been shaped with technical requirements input from Vodafone, KDDI, BT, Orange, Telefónica, Bell Canada, Telia and MTN to ensure that the RFI process aligns with the real-world needs and expectations of telecom operators. Responses will be evaluated against industry-validated interoperability and compatibility standards, ensuring seamless integration with diverse network environments.
Existing IP backbone routers are predominantly built based on a chassis structure with front access where the Interfaces (NNI/UNI) cards and the control boards are plugged into a common backplane. This model worked well but to build in all the extra redundancy and resilience they ended up with high computing capability, high capacity and high cost. That means larger data centre footprints and finite slots for new services. Also having all the NNI & UNI interfaces centralized into the same chassis is risky if the entire node is lost for something as simple as a misconfiguration or software glitch.
Pluggable shift
TIP points out that with the industry shift happening in the optical pluggable transceivers and the dawn of 400G QSFP56-DD optics, the services providers need to replace the current installed base to higher capacity, more compact dimensions, flexible thermal management ports which enable supporting higher capacity links with optimum port density per RU.
In addition to the 10G/25G/40G UNI interfaces, 100G and 400G UNI and NNI interfaces need to be supported to get the outmost of the interface capacity through the backplane bus. As a result, telcos need a new approach to protect their IP backbone investments.
Hyperscalers overcame these issues by move to spine and leaf-based architectures to disaggregate the control plane from the data plane, which instantly solves the dependency on the router switching capacity and the number of interfaces. TIP points out that with less risks compared to entirely migrating the service to a new chassis in the scale-up model, upgrades in Spine & Leaf-based architecture is imposing less operational risk for instance, you just need to connect a new spine router to increase the overall system capacity and connect a Leaf router to increase the number of interfaces. This is where DDBRs will play out.
As part of the RFI, each vendor’s response will be evaluated against a threshold-based criteria, gauging the completeness of the solution against the comprehensive set of requirements outlined in the Detail Technical Requirements document. Submissions are due by 2 February.
Head of networks lambasts rivals Vodafone, Virgin Media O2 and Three for lack of progress
Today will see the progress of phase one of the UK’s Shared Rural Network (SRN), a key policy put in place by Boris Johnson’s government, debated in Parliament. It is intended to bring 4G coverage to the whole of the UK in 2027.
Perhaps lack of progress by some would be more accurate. This is a further embarrassment for the Tory government, after its decision last October to pull the plug on another of its infrastructure flagships, the northern leg of its HS2 rail link.
Delays by rivals on the SRN has moved BT Group’s Chief Security and Networks Officer, Howard Watson, to write a critical blog.
It is important to read the blog with two things in mind. Firstly that BT started off with considerably more mast sites than its rivals. Secondly, no agreement was ever reached with BT regarding the sharing of its masts with rivals.
Its competitors argued that in some instances this meant unnecessary duplication. BT’s response was that it could not see any reason to give away the advantage it had gained by investing in more sites.
The SRN
The SRN was set up in March 2020. The UK’s four mobile network operators, BT/EE, Three, Virgin Media O2 and Vodafone made a pledge to the UK government that they would each reach 90% geographic coverage by the end of 2027.
In phase one, the operators were to jointly invest £532 million to upgrade most ‘partial not-spots’, which are areas with coverage from at least one but not all the operators. Each operator was to expand its coverage to 88% of the landmass. The deadline for phase one was set at June 2024.
Further, the UK Government would provide £500 million for the operators to build new masts to eliminate ‘total not-spots’ or hard to reach areas where there was no coverage, to be completed by 2027.
Not spots indeed
According to Watson, EE fulfilled its commitment six months ahead of schedule, completing the work last week, bringing coverage to more than 88% of the UK’s landmass. In Scotland, EE has installed 4G on 50 of the 55 sites funded by the Scottish Government under their Scotland 4G Infill programme. It has worked with the government in Wales, also a mountainous country, to deliver bespoke new sites.
Howard states, “We’ve delivered these promises in the face of tough economic conditions, a global pandemic and a wide range of digital transformation within our own networks. Which is why it’s surprising to see those very same problems being used as an excuse by other networks for their slow progress.”
More support
He goes on to say that despite Government funding to build 55 brand new sites in Scotland, two network operators have built under a third of the sites between them, while the fourth has added 4G to one site in the past three years.
Last October, Three UK, Virgin Media O2 and Vodafone appealed to the government for a two-year extension to the deadline for phase one. They said they still intended to meet the deadline for phase two. There have been suggestions, refuted by the firms, that Vodafone and Three have dragged their feet, waiting to see if they will be given regulatory approval to merge.
Whatever the reason, Watson has no sympathy. He writes, “delivering legally binding commitments like these to Government takes a concerted effort and strategic sacrifices; there is always a choice for how, what and where a business chooses to invest. And given the involvement of taxpayer money to fund coverage, it’s hard to blame the wider investment environment for missing this licence commitment.”
The telco’s Telebirr service proves popular as the telco shrugs off foreign investment hurdles for now
State-owned telco Ethio Telecom posted a 14% rise in 1H profit driven by growth in its mobile phone-based financial service Telebirr. EBITDA rose to ETB 19.77 bn ($352 million) while revenue grew by 26% to ETB 42.86bn.
The operator said the Telebirr service has achieved 104% of its target by attracting over 41m customers – out of 74.6m total subscribers – in the first half of the budget year. The services transaction value reached ETB 910.7 billion in the six months of the fiscal year, while transacting ETB 1.7 trillion throughout the economy since its launch, according to CEO Frehiwot Tamiru (above).
Last month, Ethio Telecom launched a Telebirr-based Digital Financial Marketplace that enables banks, microfinance, insurance and other institutions to use the platform and easily make their financial products accessible and inclusive to their customers at large. The marketplace includes share buying and selling processes and supports microfinance services, including micro credit, saving and insurance services for financial institutions. The telco has already entered to discussions with Ahadu Bank, Siinqee Bank, Enat Bank and Awash Bank to join the platform and approval from the National Bank is “expected soon”.
Tamiru credited the successful half to: “providing affordable new and enhanced products and services, along with various mobile financial and digital offerings.” This included expanding its 4G network to 340 towns and cities and comes despite competitor Safaricom entering the Ethiopian market.
The CEO added the 26% revenue increase marks a significant improvement from the same period last year, despite operational challenges like service disruptions due to security issues, power outages, vandalism of critical infrastructure and foreign currency shortfalls.
Hurry up and wait
Ethiopia’s telecoms industry, serving a population of around 120m, was considered a big prize in Prime Minister Abiy Ahmed’s push to liberalise the economy after he took over in 2018. In 2021, he opened up Ethiopia’s telecom industry to foreign players, approving new licenses to improve service quality, availability and affordability.
However, the country’s recurring security problems, legislative changes and concern about the government’s commitment to opening up its tightly controlled economy have deterred investors. Although Safaricom launched commercial mobile network services in October 2022 after winning the country’s first private telecoms licence, the regulator still has not sorted out the licence for a third national operator despite the process kicking off in 2021.
Meanwhile the government has flirted tirelessly with attracting foreign investment in Ethio Telecom saying it would offer a 45% stake to foreign investors last year, up from the 40% it said it would offer in November 2022. It was enough for Orange which last November said it had decided to withdraw from buying a stake of up to 45% in Ethio Telecom.
At the time Orange said: “After analysis, the group believes the conditions do not allow for the rapid deployment of our strategy and the completion of a project that would create value for the company.” The withdrawal pretty much left UAE’s E& as the potential frontrunner – if the divestment happens.
Dell’Oro concurs, suggesting the RAN market will decline again in 2024
Ericsson said it expects further decline in 5G gear demand from mobile operators this year including in its key growth market of India, despite beating fourth-quarter operating profit expectations – helped by software sales. Sales in for FY23 fell three percent to 263.3 billion kronor – lower than expected by analysts – amid a “very weak” mobile networks market, the company said in its earnings statement. Ericsson’s fourth-quarter net sales fell 16% to 71.9 billion kronor ($6.89 billion), missing estimates of 76.64 billion kronor.
“We expect the current market uncertainties to prevail into 2024 with a further decline of the RAN market outside China as our customers remain cautious and the investment pace is normalising in India,” said Ericsson chief executive Borje Ekholm. “In this environment, we remain laser focused on managing elements within our control, including operational efficiency and tight cost management.”
After a few years of high demand for 5G equipment, buying by telecom providers slowed last year, prompting firms such as Ericsson and Nokia to lay off thousands of employees to save costs. Ericsson could look at further cost cuts this year and that could potentially include layoffs, chief financial officer Carl Mellander told CNBC. He added the company has not yet identified a specific number of headcount or billions set to be taken out.
Ericsson’s operating profit (EBIT) excluding restructuring charges fell to 7.37 billion kronor from 8.08 billion a year earlier but topped the 6.92 billion expected by analysts in an LSEG poll, while net sales fell 16% in the quarter and missed estimates, according to Reuters.
For now, Ekholm expects an operator capex rebound but he is not sure when. “Looking historically, large declines in the mobile network market are followed by a rebound,” he said, adding that telcos can sweat the assets up to a point but eventually they will need to invest to manage the data traffic growth, cost, energy usage and network quality.
Declining RAN market
Analyst firms are seeing the choppy waters. Led by the US market, the radio access network (RAN) market is on course for its fifth steepest decline since analysts Dell’Oro began tracking it. Following the greater-than-40 percent climb between 2017 and 2021, RAN revenues stabilised in 2022, but are on target to decline sharply in 2023 as the various vendors ready their Q4 results.
Now, says Dell’Oro, worldwide RAN revenues are projected to decline at a 1 percent CAGR over the next five years. Market conditions are expected to remain challenging in 2024 as the Indian RAN market pulls back, though the pace of the global decline this year and for the remainder of the forecast period should be more moderate.
Telecoms equipment suppliers are expecting a challenging 2024 as 5G equipment sales – a key source of revenue – are slowing in North America, while India, a high growth market, is also set for a slowdown.
“MBB-based investments are now slowing and the upside with new growth areas including FWA and private wireless is still too small to change the trajectory,” said Dell’Oro Group VP Stefan Pongratz. “Also weighing on the MBB market is the fact that the upper mid-band capacity boost is rather significant relative to current data traffic growth rates in some markets, which could impact the timing for capacity upgrades.”
The Asia Pacific region is expected to lead the decline, while easier comparisons following steep contractions in 2023 will improve the growth prospects in the North America region. So-called 5G-Advanced is expected to play an important role in the broader 5G journey, however, it is not expected to fuel another major capex growth cycle. Dell’Oro said the RAN segments that are expected to grow over the next five years include: 5G NR, FWA, mmWave, Massive MIMO, Open RAN, private wireless, small cells, and virtualised RAN.
“Looking back to what we said a year ago, the global market is underperforming compared to our initial outlook. Preliminary findings from 1Q23-3Q23 data reveal that the North America RAN market is declining at a much steeper rate than anticipated,” he said. “Meanwhile, RAN excluding North America is actually coming in stronger than what we outlined going into 2023, in part because of the incredible 5G ascent in India. Putting things together, it appears that the surprise on the downside in the US is more than enough to offset the stronger-than expected showing in the Asia Pacific region.
Dell’Oro expects the regional dynamics to change as the pendulum swings towards the negative in India. Wireless capex in the US is still on track to decline. Yet the analysts are forecasting the North America RAN market to grow, implying a greater portion of the capex will be allocated towards the RAN segment in 2024.
Partner content: Statistics from Allot’s live security services deployments highlight a 66% increase in successfully detected and blocked cyber threats in 2023 compared to 2022
With cyberattacks against consumers and small businesses on the rise, communication service providers (CSPs) are under growing pressure to provide effective security services to their customers. A 2022 global survey by Coleman Parkes Research for Allot reveals that 68% of CSPs’ consumer customers are more likely to purchase additional products or services if security is offered, with even higher percentages for specific demographics and those who have experienced cyber attacks.
For years, CSPs have faced challenges with low adoption rates and provisioning issues related to client-based endpoint security solutions for their consumer and small business customers. Typically, less than 5% of subscribers successfully deploy these solutions, leading to minimal benefits for CSPs.
Security for SMBs
While CSPs often provide client-based security solutions to their consumer and small- and medium-sized business (SMBs) customers, these solutions come with limitations that can lead to frustrated customers, lost revenue and unnecessary expenses.
One disadvantage of client-based solutions is the difficulty in provisioning them. If the CSP succeeds in convincing the customer to take advantage of a client-based solution, the customer needs to download, install, accept terms and conditions and configure the client before using it. Once it is configured, it needs to be updated periodically – also the responsibility of the customer.
This process, while commonplace for IT professionals and tech savvy individuals, is a hassle, if even possible, for most consumer and SMB customers. Hassle inevitably leads to low solution adoption and retention rates, meaning less revenue for the CSP and little, if any, improvement in the CSP’s image.
Calling customer service
Another sticking point for CSPs, when it comes to client-based solutions of any type, are the customer service calls that accompany the provisioning of such solutions. When an app is provisioned by the CSP, customers will naturally turn to the CSP for help when they run into issues with the app.
In some markets, a service call can cost the CSP between $8 and $15. For a troubleshooting call, that cost can rise to as much as $35. For a service that brings in $3 or so of monthly revenue for the CSP, a single call can be the difference between annual profit and loss for a customer.
For these, and other reasons, CSPs are reticent to introduce new endpoint solutions. In the end, endpoint solutions, from convenience to pricing to service, are not designed to properly serve the needs of the CSP, and their vendors are not invested in the success of the CSP.
The emergence of network-native security services has marked a significant shift, positioning itself as the new gold standard for CSPs. This model offers easy deployment, provisioning, and usage, resulting in high service adoption rates.
Directly deployed
With network-native solutions deployed directly in the CSP’s network, the CSP can offer high-quality security services as part of the core offering along with connectivity. With a network-native solution, security services can be zero-touch – no installation and no provisioning hassle for the customer. With zero-touch deployment, network-native security services have proven to achieve adoption rates of up to 30%, providing a mutually beneficial solution that addresses the evolving security landscape and CSPs’ needs.
The limitations of client-based solutions, including provisioning difficulties and high customer service costs, contribute to their low adoption rates. In contrast, network-native security simplifies the provisioning process, reduces support costs, and ensures a hassle-free experience for customers. This approach proves advantageous for both CSPs and end-users.
The advantages of network-native security are many. While there are some advantages that seem obvious, others might surprise you. When the solution is not installed on the customers’ devices, one basic advantage includes OS independence. In addition, running in the network means that network-native security also has no impact on battery life or device performance the way client-based solutions do.
It cannot be accidentally deactivated or deleted and there is no need to install it on multiple devices. Beyond these customer-pleasing advantages, below is a broader sample of why network-native security is an ideal choice for both CSPs.
Revenue Sharing – The CSPs can expect a revenue sharing model that encourages the vendor to be invested in the success of the CSP’s service.
Provisioning – When all the customer needs to do to start using the service is to accept it through the CSP’s UI, portal, promotion or point of sale, adoption rates increase.
Support Calls – A zero-touch solution that sits on the network instead of on the customer’s device reduces the number of support calls.
Exclusively built for CSPs – Network-native security is, by necessity, designed, built and implemented exclusively for CSPs, ensuring that the solution is aligned with the integration and marketing demands of the CSP.
Branding – The CSP can control the user experience of their network-native security offering which is white labeled by design.
Software and definitions updates – Drawing from a cloud-based library which is constantly updated, the network-native solution ensures that all subscribers who use the solution are protected from even the newest threats, without their needing to lift a finger.
Management – Network-native security solutions are easy to manage and keep up to date since all the IT configuration happens in the CSP network. There is nothing for the end customer to do but to enjoy their digital experience without cyber threats.
End user experience – Since the bulk of the technology sits in the network and not on the device with a network-native solution, the non-technical end user experiences a much easier-to-use tool.
Parental control/Content filtering – The nature of network-native security makes it possible to implement parental control services for consumer customers and content filtering services for small business customers with no installation necessary. As the threat of cyberattacks continues to rise, network-native security has emerged as a transformative solution for CSPs. With its high adoption rates, streamlined provisioning, and comprehensive benefits for both CSPs and end-users, network-native security is positioned as the new gold standard in the evolving landscape of cybersecurity solutions for consumer and small business customers
Reported tower sale will spur 5G competition from the smallest mobile operator as it chases market share
Telecom Egypt has successfully obtained a license to operate 5G services after signing a contract with the National Telecom Regulatory Authority (NTRA). The operating licence, valued at $150m, will run for 15 years, although will not be automatically renewed.
Telecom Egypt’s CEO and MD, Nasr Eldin, said that 5G will boost operator’s revenues from data services over the next five years and will be rolled out in specific areas based on economic feasibility. The company has started the trial operation phase of the service in five locations, including its headquarters in the Smart Village, according to Daily News Egypt (DNE).
The CEO expects a trial period of three to five months before the service is launched commercially. He confirmed to DNE that around 50% of Egypt Telecom’s network is 5G-ready, needing only software updates. He added that around 8% of smartphones in the Egyptian market are 5G-compatible.
Nasr said that in June 2021, the Administrative Capital for Urban Development and Egypt Telecom set up the first shared 5G-enabled mobile tower in the New Capital. This shared mobile tower allows all four mobile companies to offer various mobile services through one tower, supporting legacy Gs, as well as 5G technology.
As of Q2 23, the Egyptian mobile market remains predominantly skewed towards the prepaid segment with high numbers of 2G, 3G, and 4G subscriptions. The market is shared between Etisalat, Orange, Telecom Egypt and Vodafone. Of these four operators, Vodafone has the largest subscriber base of 46.2m subscribers in Q323, and Telecom Egypt has the smallest, recording 12.5m subscribers in the same quarter. However, the latter operator has also been the fastest-growing, having only entered the mobile market in Q3 17
Tower boost to 5G plans
In order to further support growth, especially towards rolling-out 5G technology, Telecom Egypt is reportedly talking to tower companies about selling and leasing back 2,500 of its 2,800 towers. Three towercos were named as frontrunners: Helios Towers, IHS Towers, and Mobi Tower. The sale, according to Fitch company BMI, would increase the amount of free funds towards investments in 5G as a potential deal, set to close in Q124, is estimated to be worth USD250m (EGP7.7bn).
As a result of the sale, BMI said when 5G enters Egypt in 2024 the overall market will grow to 766,000 subscribers. By 2032, BMI estimates this will be 35.5m subscribers, even with 4G still being the dominant form of network connection, sitting at 93.7m subscribers.
“Upon a completed towers sale, we expect a potential improvement in Telecom Egypt’s free cash flow (FCF) position that will support the operator’s rollout of advanced connectivity, thus offering upside potential to our figures,” said BMI. “The sale of towers is also likely to improve Telecom Egypt’s quality of service, assisting growth in the total number of mobile phone subscribers, which we project will increase from 103.3m to 129.1m from 2023 to 2032.”
BMI believes the sale will mean Telecom Egypt will continue to take market share from the other three mobile operators as more funds for growth are allocated. Secondly, developments of 5G infrastructure in Egypt are likely to occur at a faster rate as Telecom Egypt invests more aggressively in the technology, consequently intensifying competition over advanced mobile connectivity as other operators follow suit.
