Taking to the Streets

Egypt’s two private payphone operators, Menatel and Nile Telecom, are planning to link up with the country’s GSM networks and expand into new areas.

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By  Richard Agnew Published  August 26, 2004

Telecom Egypt (TE) took a step back from the payphone market after the launch of two private operators, Menatel and Nile Telecom, in 1998. But now it is refreshing its focus on the sector, saying that it has given the start-ups enough time to develop. While in the past, TE only installed terminals outside its local exchanges, they are now starting to spring up elsewhere. The operator struck a deal recently with three equipment vendors to install 3000 public kiosks offering payment via prepaid smart cards, and is in discussions with the National Postal Authority (NPA) about deploying phones in the organisations’ post offices across Egypt. The two private players are beefing up their defences, however. Menatel, the market leader, has been trialling per-second billing and is considering the launch of common tariffs for local and national calls. Nile Telecom, which already offers charging by the second, is also preparing to add over 6000 units to its network. “We’re planning to expand to 20,000 payphones by the end of the year,” says Hesham Gabr, the operator’s CEO and MD. The increased competition, as well as pressure on consumer spending in Egypt, has also prompted the providers to seek out new sources of revenue beyond voice calls. Nile Telecom will focus its expansion on its Ringo-branded line of phones, which offer telephony as well as services such as SMS and voice mail. “We’re also studying web-enabled phones [although] we’ve seen that in Europe, they didn't experience great success,” adds Gabr. Both are also now preparing to launch payphones linked to Egypt's mobile networks. If approval is gained, this will allow them to target specific segments such as tourism and expand beyond TE’s network. The operators’ expectation is that they will get licences by early 2005. “If we are going to expand, we will do so through GSM phones,” says Mohamed Safaa, commercial director, Menatel. While Nile Telecom has not yet decided which of Egypt's two GSM networks it would team up with, France Telecom provides a common link between Menatel and MobiNil. The group manages the former and owns a stake in the latter through its mobile arm, Orange. This, Safaa says, would lead to a deal. Nevertheless, cooperation between the mobile and payphone operators would belie fierce competition between them over the last few years. While cellular uptake has caused payphone operations in several other markets to close down, Egypt’s have fared better, helped by users' custom of swapping missed GSM calls and returning them via payphones. MobiNil's rival, Vodafone Egypt, is also looking to break into the operators' territory with GSM-based interactive kiosks on Nile cruise-boats. Both payphone operators also have other plans in the pipeline to widen their businesses’ reach. Although Egypt has a crowded internet market, Menatel launched an ISP division called Internext earlier this year after striking a deal with its sister datacomm provider, EgyNet. Nile Telecom has a similar plan, says Gabr. According to Safaa, Menatel also aims to launch DSL soon and offer VoIP once licences become available from the TRA, possibly next year. Further down the line, Menatel, which now has over 30,000 units deployed, hopes to refashion itself into a ‘universal service provider’ by taking the plan to deploy terminals in areas outside TE’s coverage area a step further. To achieve this, its idea is to pass some of the costs of deployment to the government in return for the benefits provided by increased tele-density. "We have been talking with the government about [deploying payphones] in all the villages in Egypt," says Safaa. "This would cost us a lot in maintenance and the distribution of cards and not allow us to use regular payphones. The revenue from them will also be lower, so they would definitely generate a loss. But the government would bear the cost of the equipment and we would [pay for] the cards and the maintenance," he adds.

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