Egypt will offer two licenses to provide telecommunications services for upscale suburbs outside the capital, including fixed lines, a government official said Wednesday, in a move expected to bring in $1 billion worth of investments over the next five years.
Communication and Information Technology Minister Tarek Kamel said the licenses will be granted to a pair of consortia to operate so-called "triple-play" services that group internet, cable TV and phone services within such communities springing up around Cairo and elsewhere in the country.
The move marks the first potential crack in the state-owned Telecom Egypt's total monopoly over fixed line communications, though for now the services are only for within these communities.
"These two additional licenses are for inviting consortia to come in from the private sector whether locally or internationally," said Kamel, speaking on the sidelines of the Euromoney Egypt conference.
The companies will not be required to submit an upfront payment, but the licenses would be based on a revenue sharing program in which the government would get 8 percent of the proceeds of operations within these compounds.
Telecom Egypt would still operate in these communities, including fixed line services.
Kamel also said that these companies would be providing value added services such with the new "triple play" approach.
Kamel said the bids are due on Jan. 12 and the decisions would be made in the second half of 2010. The communities affected are those which house between 50 to 5,000 units, while larger communities would be served by Telecom Egypt.
The move by the government comes as the country has been grappling with the fallout from the economic meltdown.
While Egypt has fared better than many other nations, with officials projecting economic growth of over 5 percent for the fiscal year ending next June, it has still struggled with slumping foreign investment as the world's worst economic recession in decades has prompted investors to tighten their purse strings.
Kamel said the decision not to require any upfront payments was to attract foreign companies during slim economic times. Additional licenses could also be offered in the future.
"There is no exclusivity," he said.
Over the last few years, Cairo has been expanding and its developers have invested billions of dollars in new housing communities in the desert catering to upper- and middle-income Egyptians.
The government's move also indicates a shift in the responsibility for providing infrastructure from the state to private developers.