By: Heba El-Kordy

Analysts have expressed varying opinions with regards to Telecom Egypt’s (TE) exit from its 45% stake in Vodafone and the extend of its profitability from the newly-launched fourth mobile licence.

TE’s stake in Vodafone currently makes up 40% of its consolidated profits.

Analysts expressed different opinions over the impact of launching TE’s “WE” operator on the company’s financial position and its ability to acquire a market share given the harsh competition between the three current mobile operators, namely: Vodafone, Orange, Etisalat.

TE CEO Ahmed El Beheiry recently said that his company was not planning to exit its stake in Vodafone Egypt, and also revealed that TE was in the final stages of receiving an EGP 13 billion loan to finance its current and future expansions.

Difficult exit

Mohammed El-Messiry, telecommunications analyst at Pharos Research, forecasted that TE would not exit from Vodafone Egypt, pointing out that it represents about 40% of its profits.

El-Messiry attributed TE’s losses to the differences in exchange rates, which will start vanishing by November.

The loan, which TE is aiming to get, will raise the firm’s financial burdens over the coming period, especially after the rise in loans’ interest rate, he noted.

The telecom analyst has a negative perception over the launch of TE’s “WE”, as the telecom sector is already saturated with other operators, which will push TE to decrease its rates, weakening its ability to make profits from services.

TE is anticipated to maintain its good performance in the third quarter of 2017, El-Messiry said, noting that the negative impact of the mobile services will start appearing in the fourth quarter of 2017.

Medium-term exit

On the other hand, telecom analyst at Belton Financial Ahmed Adel said that TE would turn to exit from Vodafone Egypt over the coming period, depending on its ability to acquire a significant stake in the Egyptian telecom market.

At the operational level, launching TE’s mobile network is a positive step in the firm’s history, Adel added, noting that there may be some financial concerns once these services are launched.

New solutions

‎Meanwhile, managing director and global head of research at Mubasher Financial Services Amr El-Alfy excluded TE’s to exit from Vodafone Egypt over the coming period.

In the event that TE’s burdens are magnified, solutions may include selling a portion of its share in TE Data or Xeed, or may offer a stake on the Egyptian Exchange (EGX), El-Alfy added.

He added that reasonable rates and services, which would be provided by TE’s customer service, would bolster the firm’s network, noting that the firm will need to present new and unique services as compared to its competitors.

TE is likely to acquire about 2% of the Egyptian mobile network market in a period ranging between nine months and a year.

Translated by: Mai Ezz El-Din and Nada Adel Sobhi