The introduction of new triple-play licenses in the country is expected to generate USD 1 billion investment over five years in the telecom market. These new triple-play licences promise innovative services for subscribers.
In October 2010, the regulator announced winning bidders for two new triple-play licenses. The first license was signed with Link – a consortium including Mobinil and Orascom Telecom. The second triple-play license was signed with Tele Tech, a consortium led by Vodafone Egypt. New license holders will compete with Telecom Egypt as it already offers triple-play services.
While these are positive signs, there remain certain market challenges. For instance, the significant prevalence of pre-paid and multi-SIM subscribers causes high churn between operators. Subscribers seek to benefit from promotions offered by different operators.
During the forecast period of 2011- 2018, one of the main challenges for operators across the mobile telephony market will be churn reduction. The current aggressive pricing competition is unsustainable and causes multi-SIM usage by subscribers. This is an important issue for operators as the next stage of growth is expected from low-income subscribers.
Pricing is a key driver for the uptake of mobile services, but quality of service has become a key consideration for subscribers. Quality of service has increasingly emerged as the major competitive differentiator amongst Egyptian operators.
High service quality will enable operators to better manage churn. It will also drive subscriber retention.
By Frost & Sullivan Research Analyst Jonas Zelba
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