• The government receives a large infusion of hard currency or debt forgiveness for divesting itself of a guaranteed revenue generator.

•  The sector benefits from a new infusion of investment in the latest technologies and managerial practices.

• The new owners gain control of a nation’s dominant communications network and all the resultant revenue streams. 

     Egypt, by fact of its geo-political significance and domestic political economy, was able to withstand the gathering international momentum behind privatization throughout most of the previous two decades. (Kamel, R. 1998)  The momentum, however, proved to be irresitable - an  entire economic restructuring package has been implemented by the GOE over the past five years, but privatization has proceeded at a slightly slower pace, particularly in the area of telecommunications.

    The GOE joined the global telecommunications restructuring effort cautiously.  The telecommunications entity, Telecom Egypt, formerly known as ARENTO, was first  converted into a shareholding company (corporatized) in December 1997. (El-Nawawy)

    The first telecommunications foray into public placement was in January 1998 with an initial public offering of 30 percent of the $177 million Egyptian Mobile Telephone Services Co.    While still dominated by Telecom Egypt (28%) and institutional  investors (39%), it laid the groundwork for additional public offerings.  (AmCham)  In a second phase, Egypt Telecom offered a tender for the remaining percentage, the  successful  MobilNil consortium was composed of France Telecom, Motorola and Orascom Technologies.  The license has proved extremely populare and profitable - MobilNil nearly doubled the number of subscribers from 83,000 to 159,850 within six months of assuming control ( June 1998).
(The Middle East: Calling Out)

     In addition to this privatization effort, Telecom Egypt also embarked on a market liberalization effort.  A bid  for a license to install and operate a second GSM network resulted in the creation of Misr-Fone in November 1998. Within seven months of operation, it had 180,000 users and is predicted to top 300,000 by 2000.  In its first four months it subscribed 100,000 customers, one of the highest success rates of any new wireless telelphone network. (Ibid.)

     The total mobil phone market in Egypt is estimated at 12 million, less than 20% of the total population.  Both companies believe that half this number is waiting for the price of subscription to drop. (Ibid.)

     Market liberalization was also attempted in the provision of public payphones.  The government has granted two licenses for the operation of 20,000 nationwide public payphones for a 10 year period.  Menatel (France Telecom, National Bank of Egypt and local investors) and Nile Telecom (Landis and Gyr of Switzerland, Misr Bank and local investors) were each recipients of a license.   In the case of Menatel,  the terms involved forfeiture of 66% of revenues to Egypt Telecom, estimated at $590 million (African Connection)

     There are currently rumors of a possible 10-20 percent sale of Egypt Telecom, with a possible further 30 percent planned.  Estimated market value is $8.8 billion.  (The Middle East: Calling Out)