Vodafone raises Egyptian investment

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By  Published  November 30, 2006

Vodafone has announced it is planning to take management control of its Egyptian subsidiary, Vodafone Egypt. The UK operator is acquiring a little less than 5% of Vodafone Egypt from Telecom Egypt, raising its overall participation in Egypt\'s second placed operator to a controlling 55%. “We are very pleased to have agreed a strategic partnership with Telecom Egypt, which further strengthens the working relationship both companies have as Vodafone Egypt shareholders,” commented Paul Donovan, CEO of Vodafone\'s Middle East and Africa region. The state telco Telecom Egypt acquired a 25% stake in Vodafone Egypt after plans to establish its own mobile network in the region were modified in the face of worsening economic conditions. The Egyptian mobile market has thus been presided over by Vodafone and MobiNil, which has given rise to a situation in which charges remain at relatively high levels. However, the threat of increased competition within the Egyptian market occurred following the procurement of a third operating licence by Etisalat earlier this year. The looming threat from Etisalat has already spurred Vodafone Egypt into introducing more attractive price plans and Vodafone\'s moves appear to indicate the operator does not want its subsidiary to fall any further behind current market leader MobiNil. Telecom Egypt will continue to provide exclusive international gateway services for Vodafone Egypt under an extension of the current agreement. Vodafone Egypt will also extend its distribution channels for Vodafone products and services through Telecom Egypt\'s outlets. “This agreement will also allow Telecom Egypt to maintain a substantial portion of the international voice services volumes from Vodafone Egypt after the liberalisation of international gateway services in Egypt,” said Akil Beshir, chairman and CEO of Telecom Egypt. The entry of Etisalat as a third player is likely to drive prices down in the Egyptian market further, and strong management will be required by all operators.

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