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10 January 2013
| Kavit Majithia
With Egypt’s political situation still unresolved, will state-owned Telecom Egypt’s ambitious plans to transform its fibre-optic corridor into an ultra-high capacity network take a back seat?
appointment as CEO and managing director of Telecom Egypt in
August 2012 was welcome news for the company’s
El-Nawawy previously served as VP of international wholesale,
and more recently as SVP and chief strategy officer, but
continued to head up Telecom Egypt’s submarine
cable division. The move is deemed internally as a clear sign
that the new regime in the country is taking wholesale telecoms
at the company very seriously.
It is rare to find the figurehead of a company the size of
Telecom Egypt with such a strong past in wholesale.
El-Nawawy’s appointment was part of a management
reshuffle following the end of Hosni Mubarak’s
30-year tenure as leader of the country.
With Telecom Egypt 80% state-owned, and a large part of the
revolution led through social media campaigns, the
company’s future fortune is certainly something
that requires a large level of attention for the new
Stability on subsea routes comes
hand-in-hand with a stable political environment, which is why
Telecom Egypt is now pushing ahead with a long-standing project
to mesh its submarine cable networks together.
Mohamed Saro, Telecom Egypt’s director of
international customers and networks, outlines the
company’s intentions to create an ultra-high
capacity transmission network, which gives operators connecting
to the 'super cable’ a different a range of
options if they
opt to land in Egypt.
"The project gives companies the ability to cross through
several different routes across one high super capacity
network. This could be through two routes of dark fibre pairs,
or a route that is protected by an SLA for example."
Saro says the ability to migrate the cable into another
existing one on the same route will further enhance resiliency.
"Considering all the cable systems already crossing through
Egypt and with more being built, it is important for us to
offer additional resiliency," he says.
The project, like most things in Egypt, still requires
governmental approval, but the company expects to have the
first phase completed by next year. "By 2013, we may not have
the full route in place, but certainly a subset of the
projected cables will be addressed," he says.
If successful, the model will significantly transform the
subsea cable market dynamics in Egypt. Saro said, however, it
will still require the present government to firmly establish
itself as the ruling party for it to go ahead.
Saro says the initiative promotes a "pay as you grow" model,
rather than a long standing IRU which ties in an operator to a
specific route. "Normally you have these contracts which tie an
operator on dark fibre pairs on two routes, but on this, it is
all dependant on your requirements," says Saro.
"If you have mission-critical traffic for one of your
wavelengths and you need to enhance resiliency, this project
allows a company to do that. We aim to provide an easy hop-on
and hop-off solution through cross connections on different
The company paints a positive
picture of the new government’s potential, both
from a telecoms standpoint and on a wider economic and
Saro points to the recent developments made by the Islamist
regime in the communications industry. "Government is helping
us reformulate and reform directives to make Egypt a better
place and recover the country’s image which has
been affected over the past year."
It is widely thought that the internet played a crucial role in
Egypt’s revolution and the subsequent removal of
Mubarak as leader. And the term 'Egypt 2.0’,
heralded by ex-Google employee and activist, Wael Ghonim, is
used to highlight how important the communications industry is
to the country’s modernisation process.
Saro also agrees that it is an absolute necessity. "Our
submarine cable initiatives were severely hurt by the old
regime, which insisted on certain directives for cables. Cables
going into Egypt had to go through a set of frameworks which
caused a lot of delays to any international development. It
appears the new government is realising the importance of
Egypt’s geography," he says.
The Egyptian telecoms market hopes to undergo numerous changes
intended to open up the market and give Telecom Egypt more
leverage in its fixed and mobile operations. Saro draws on
comparisons to what happened in China when the market was
opened up for operators to gain access to universal licences,
as an example of what could be set to happen in the domestic
"We believe these routes will happen and if the market opens up
to provide us with more competition, I am confident our routes
are the shortest from the Red Sea to the Mediterranean with the
lowest latency," says Saro.
Since speaking to Saro, however, the country’s
political situation remains on a knife edge with fierce
opposition generated against Islamist party leader and
democratically elected President Mohamed Morsi. At the time of
writing, violent clashes and fierce protests in Cairo are
occurring in earnest against a proposed referendum that will
substantially increase Morsi’s power.
The proposed subsea cable project
could help Telecom Egypt unlock the potential of the
country’s geographical position, and discover new
opportunities for growth in Africa and Asia. It plans to
introduce a wave of projects in the regions throughout 2014 and
2015 and has "connections into east Africa at the top of our
agenda", claims Saro. "The next three years will see our
infrastructure expansion phase, with the aim to continue to
grow both horizontally and vertically."
Along with accessing emerging markets, the company remains just
as committed in accommodating new service areas. Saro says
there is an increasing amount of OTT players beginning to
implement nodes across the country, with the aim of tapping
into the country’s relatively young and
increasingly social media savvy population.
"There is a slow but sure realisation that Egypt is pivotal,"
he says. "Considering the amount of traffic the country
generated last year, there has been an increasing number of
companies caching here and peering through us, with the aim of
bringing CDN services to our networks. There will be big
Seemingly, there is an underlying mission for Telecom Egypt to
convince the international community that the north African
country is a place to come and do business again. "We are
trying to create a transit friendly environment for the
different carriers and providers to leverage the different
cable systems which can provide them with connectivity into
neighbouring countries, to western Europe, the Mediterranean
basin, Asia and the Arabian Peninsula."
Of course, it is important for a state-owned company in a
country beleaguered with political instability to project the
right image to promote international investment. With the new
President already under fire, and opposition parties gaining
traction, it appears that Telecom Egypt’s
ambitious plans for development will depend on political
2013 could well be a pivotal year for both the country and the
History: Telecom Egypt has been the major telecoms
company in Egypt for over 150 years and formerly operated as
the Arabic Republic of Egypt National Telecommunications until
1998. It launched its first telegram line connecting Cairo and
Alexandria in 1854. The majority state-owned company had its
first IPO for 20% of its stock in 2005.
Ownership: Telecom Egypt is 80% state-owned
and 20% publically-owned. Its IPO raised over $890 million and
at the time was the largest international equity offering
coming out of the Middle East and north Africa region.
CEO: Mohamed Amin El-Nawawy was appointed as
Telecom Egypt’s CEO and managing director in
Customers: Telecom Egypt has a fixed-line
customer network of over nine million, and it’s
subsidiary TE Data has an internet broadband subscriber base of
almost 1.2 million. The company has 18 related equity interests
across Egypt, the Middle East and north Africa.
Network: Mobile operators within Egypt rely on
the company’s network infrastructure capabilities
for international and wholesale calling. It operates as a data
hub between Asia, Africa and western Europe. The TE North
cable, built in collaboration with Alcatel-Lucent is a 40G
undersea cable connecting Egypt to Marseille, France with
presence in Jordan and Cyprus.