Mohammad Hassan Omran Chairman of Etisalat

First to establish mobile telephony in the UAE in 1982, and fibre optics in 1984, UAE telecoms service provider Emirates Telecommunications Corporation (Etisalat) landed Egypt’s third GSM operator license last year. It expects to acquire a third of the market, representing 10 million subscribers, within the next three years. Ranked by Middle East magazine as the 6th largest company in the region and one of the Financial Times Top 500 Corporations, Etisalat plans to invest $1.4 billion on building its new network in Egypt - the most populous country in the Arab world - where penetration is still below 20 per cent.

Etisalat paid almost double the expected price, $3 billion, for the license, which was the first to be offered in Egypt in eight years. Trouncing 11 competitors to join Mobinil and Vodafone as the third mobile operator in the country, Etisalat also agreed to pay 6 per cent of its annual revenues to the National Telecommunication Regulatory Authority, in addition to the investment it will carry out to build its network. Having launched on May 1st of this year, the company stated it will sell shares in an initial public offering on the Cairo and Alexandria Stock Exchanges in 2009.

Chairman Mohamed Hassan Omran says the bidding process was well organised and transparent, and that Etisalat had been studying the Egyptian market with interest for some years. “We have witnessed a lot of development in Egypt. With the new government and the innovative mindset they are building, things are changing in a very positive way,” he comments, adding that the open economy is drawing a number of new investors such as Italian San Paolo Bank, which recently won the tender for the Bank of Alexandria.

Etisalat’s bid represented the largest foreign direct investment in Egypt in 2006, which some analysts have said should amount to a positive surplus of 5.3 per cent in the government’s projected budget and have significant impact on both the fiscal and external balance for FY 2006-07. In addition, Etisalat-Egypt will hire roughly 2,000 Egyptian employees over the next few years. This is in line with the company’s philosophy of contributing to the countries in which it operates, says Mr Omran, which today amount to 14 throughout the Middle East, Asia and Africa.

“Everywhere we go, we focus on adding value in that specific country. Many changes are taking place in the telecom sector and customer needs are not restricted to connectivity anymore. They need more services, which definitely creates challenges and opportunities for us. we are working to expand further.”

This includes allying with other providers in content, radio, gaming, music, sports and banking, he says, adding, “According to our philosophy; when we add value, we gain more value.” In Egypt, the company was the first to offer mobile television, high-speed Internet access and video calling. It is also the first operator in Egypt to offer a 3.5G network. By 2009, the company intends to have its network rolled out over 90 per cent of Egyptian territory. Etisalat’s reputation for providing the most advanced telecom infrastructure had won it over 400,000 clients in Egypt by the end of its first month of service – a figure it hopes to boost to three million by the end of 2007.

Established in the UAE in 1976, Etisalat is a unique example of a public-private partnership, and one of the first created in the global telecoms sector, notes Mr Omran, who says that this allowed the company to become innovators not only in the UAE but throughout the region. In 1984, Etisalat laid the first subaquatic cable in the Persian Gulf linking the UAE with Qatar and Bahrain, later adding cables to India and Pakistan.

Etisalat was the only company from the Middle East to sign the original GSM Memorandum of Understanding in 1987 before GSM networks were launched anywhere on the globe. In the early 1990s, the company drew up a 20-year plan that focused on mobile telephony and the Internet, which, according to Mr Omran, led to the UAE becoming a regional Internet hub.

In Egypt, Etisalat holds 66 per cent of the new licence in a consortium that includes Egypt Post, The National Bank of Egypt and CIB. Mr Omran says that working with local partners is Etisalat’s modus operandi, and that partners in Egypt were carefully selected for the strengths they could offer the new venture. He notes that both Egypt Post and the National Bank have wide distribution networks already established in the country while CIB is a young and innovative bank, with profound experience and capability in the economic sector.