The Possible Value of the 3 rd Cellular License Bid in Egypt. An Arab Advisors’ Analysis Based on Regional Benchmarks October 31, 2005. Egypt’s Regulator NTRA delayed 3 rd Mobile Network. Reasons for the delays:
An Arab Advisors’ Analysis Based on Regional Benchmarks
October 31, 2005
Reasons for the delays:
The Arab Advisors Group’s team of analysts has made a benchmarking exercise on the fees paid for regional GSM and cellular licenses in the region. A total of 17 licenses awarded between 1998 and 2005 were analyzed. The 17 licenses were in the ten countries of Algeria, Bahrain, Egypt, Jordan, Morocco, Oman, Saudi Arabia, Sudan, Tunisia and Yemen.
The benchmarking exercise calculates the value of license per capita in each of these licenses. In arriving at a possible fair value for Egypt’s third GSM license, the Arab Advisors team took into account many factors such as number of operators, penetration rates, ARPU, and GDP per capita at the time of the award of the licenses. In addition, factors related to the license conditions themselves were also considered, such as license duration and availability of ILD gateway rights.
* December 2003: Telecom Egypt surrendered its GSM license, and MobiNil and Vodafone Egypt agreed to pay EGP 1240 million (US$ 201.6 million) each to access the 1800 MHz band
* World Bank
US$ 8.13 per capita in 1998
US$ 2.94 Per Capita in 2003
US$ 11.07 Per Capita
Egypt’s cellular market is in a strong growth phase and will continue to grow
Method: Egypt’s GDP figure divided by benchmark country’s GDP
Yemen (1.73); Egypt (1); Jordan (0.51); Algeria (0.41);
Oman (0.13); Saudi (0.10)
Method: Number of operators in country at time of award divided by 2 (Egypt's current number of operators). The fees paid are more relevant as the market becomes more competitive.
Method: Egypt's 2004 ARPU divided by the benchmark country’s ARPU in 2004
Method: Egypt 2004 penetration divided by the penetration rate of benchmark country at year of license award. Weights are normalized by division over Egypt’s weight. The close the penetration to Egypt’s the more relevant the benchmark.
Method: Egypt's license duration divided by benchmark license duration.
The benchmark license duration is 15 years.
Assumption: Egypt’s 3rd cellular license will not have ILD Gateway rights
% of Weight (relevance)
US$ 19.85 per capita
US$ 1,389.25 million
- The Egyptian economy and its currency has been growing stronger for the past 2 years.
- A booming cellular market. The cellular penetration reached 13.7% in mid 2005 compared to 8.4% in 2003.
- The massive size of the addressable Egyptian market, relatively low penetration rate, and the great growth potential for cellular market.
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