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Telecom Egypt at the core of the Golden Pyramid
01 April 1999
Telecoms in Egypt remained fairly stagnant until 1997, when the government took steps to liberalize the cellular sector and corporatize the incumbent operator, Telecom Egypt. A modernization programme is also under way, which involves the installation of millions of new telephone lines. Telecom Egypt's chairman, Abdel Fattah Abou Serie, talks about the goals behind this programme.
The Egyptian government initiated partial deregulation of the
telecoms sector in November 1997, announcing plans to open up
the mobile sector to competition. It also indicated that the
incumbent, Telecom Egypt, would be corporatized as a first step
before privatization. At the same time the government has
launched a modernization programme in the telecoms sector, with
a number of projects involving foreign manufacturers, geared at
improving teledensity and network quality. The government
realizes that, owing to its unique geographic location, Egypt
could be a regional hub for telecoms traffic for Africa and the
In an interview with Global Telecoms Business, the chairman of
Telecom Egypt, Abdel Fattah Abou Serie, talks about the
modernization programme, restructuring and the operator's role
as a potential regional hub.
Despite plans to transform Telecom Egypt into a profitable
joint stock company, so far there have been no staff
reductions, as Abou Serie explains: "A new law dated March 26
1998 separated operation from regulation. Telecom Egypt is
being reorganized from a public authority into a profitable,
customer-focused joint stock company. In the same year the
Telecommunication Regulatory Authority was established. There
has been no reduction in staff levels. We are training people
for the new view of the company, which is more focused towards
the marketing of services and features provided by Telecom
The "Golden Pyramid" programme
Teledensity is clearly a priority issue for Telecom Egypt: in
1981 it stood at 1.8%. As Abou Serie makes clear, Telecom Egypt
plans to install more lines as quickly as possible: "We plan to
achieve a teledensity of 14% by the year 2002."
The Golden Pyramid programme is just one of a number of
projects that are being undertaken to achieve this goal.
Telecom Egypt is working with a number of suppliers. In
November 1998 the operator awarded a contract worth an
estimated $300 million to Lucent Technologies to install
700,000 new lines. In October Ericsson won a $30 million
contract to supply AXE local switches, access networks and an
operations support system.
Abou Serie talks about these "mega projects" and the suppliers
involved in the modernization drive: Golden Pyramid is a
project that involves Lucent, while NileVision involves
Alcatel. These projects, as well as Egypt 2000 with Siemens and
Rising Sun with NEC are all called "Mega Projects" to achieve
the Telecom Egypt's goal of doubling the number of installed
lines and connections to customers. All these projects include
switching, transmission and access networks. Ericsson is
responsible for upgrading the AXE switches."
As Abou Serie points out, the operator uses a number of
suppliers for switches: "AXE switches from Ericsson are used
for international gateways and tandems. Other switches from
Alcatel, Lucent and Siemens are installed all over Egypt. All
EWSD (digital electronic switching system) switches are
manufactured locally at Egyptian German Telecom Industries
(EGTI), a joint venture with Siemens." EGTI was set up between
the Egyptian government and Siemens in 1989. Telecom Egypt
holds a 10% share in the joint venture. Digital lines now
account for 75% of the lines in the network.
Technology upgrades and the Internet
Abou Serie explains how the operator is incorporating the
latest technologies: "Telecom Egypt introduced the first Packet
Switching Data Network in 1988, using X.25 protocol
accommodating 24 nodes with a capacity of 3500 ports connected
to six international gateways. A frame relay service was
introduced in 1998. We are considering the introduction of ATM.
SDH is largely used in most of the fibre links covering Cairo,
Alexandria, Delta, Sinai and the north coast. Internet
penetration is increasing more and more through different
private companies. Studies are being carried now to enable
Telecom Egypt to become a gateway for Internet services in the
While Telecom Egypt focuses on the Internet and data services,
it has a limited role in cellular ever since the government
decision in 1997 to open up the market to competition. In March
1998 a bid from a consortium including Vodafone and AirTouch
was accepted. The company, known as Misrfone, was awarded a
15-year licence to set up a GSM network in Egypt. In the
following month the government decided to offer shares in the
existing GSM network to the losing bidder in the first tender,
MobiNil, a joint venture between France Telecom and Motorola.
It was awarded a five-year licence in May.
Improvements in services to rural areas
Telecom Egypt is still involved in cellular, in particular in
rural areas, as it tries to improve access to telecoms
services. The operator also aims to use modern communications
improve educational standards: "In the 1980s Telecom Egypt
started to provide service to rural areas and has proceeded to
provide rural areas, new cities, north cost villages and
tourist villages in Sinai besides the coverage of highways with
emergency service. We are also providing wireless local loop
services for farms and newly reclaimed areas. Remote learning
and Internet services are provided in schools and universities
by the Ministry of Education with technical help and provision
of the required circuits by Telecom Egypt."
The company aims to play a greater role in the region as it
seeks to leverage its unique geographic position. The company
is active in a number of international projects that aim to
bring better connectivity to businesses in Egypt. The company
is involved in the FLAG (fibre-optic link around the globe)
project. According to Abou Serie, the company's involvement in
such projects is critical to the operator's plans:
"International telecoms services have witnessed tremendous
growth in the 1980s. This trend is expected to continue in the
1990s. In view of Egypt's unique geographical position and
Telecom Egypt's policy of establishing links with other
countries, we have participated in a number of international
links which makes Egypt an international telecoms hub. The
strategic location of Telecom Egypt in the Middle East area
gives it a great deal of importance in the field of
He continues on the benefits that the operator is accruing
from these projects: "The participation of Telecom Egypt in the
first submarine cable between South East Asia and the Middle
East and western Europe (SEA-ME-WE1) had a very positive impact
on the expansion of telecoms routes with many countries and the
increased volume of international traffic. This led Telecom
Egypt to participate in the second and third cable SEA-ME-WE2
and SEA-ME-WE3 with extended coverage to Japan, Australia and
many of the east Asian countries using WDM technology with
higher capacity and a larger number of landing countries.
Abou Serie talks about Telecom Egypt's involvement in these
projects and the progress that has been made: "Submarine cables
SMW1, SMW2, SMW3 and FLAG cross the territory of Egypt from
Suez to Cairo to Alexandria. Traffic coming from the Far East
arrives at the Suez landing station at the Red Sea, crossing
Egyptian land to the Alexandria landing station in the
Mediterranean to eastern and western Europe. FLAG is crossing
Egypt in the same way, but has an additional landing station in
the Mediterranean, which is called the Port Said landing
station. Egypt is supervising the installation and testing of
those segments international submarine cables crossing Egypt on
behalf of all the partners on those projects and takes
responsibility for their operation and maintenance."
Abou Serie continues on the benefits for its neighbours:
"Meanwhile all neighbouring countries benefit from Egypt's
strategic position to access most international submarine
cables. Egypt as a member of the Arab League has to achieve one
of those targets for Arab countries, which is to establish a
regional fibre optic network to link all Arab countries and
benefit from transit charges paid by Arab countries to reach
each other through the transit in foreign countries."
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