The telecommunications sector in Egypt is a goldmine for investment in the Gulf

The communications and information technology sector in Egypt is awaiting the entry of new investors from the Gulf into its various fields, especially telecommunications services. Regional operators are competing to take the lion’s share of its volume, with promising opportunities for growth in the market in light of economic reform policies implemented by the Egyptian government, on top of which is the liberalization of the exchange rate. Dollar to pound, as part of Egypt’s preparations to obtain a new loan from the International Monetary fund.

We have recently witnessed the rush of numerous investment funds from the Gulf to enter the local market through the telecommunications sector, which was evident in the Qatari Sovereign Fund’s negotiations to purchase Telecom Egypt’s 45% stake in Vodafone Egypt.

This comes amid expectations by some telecoms analysts that money will flow into the UAE sovereign wealth fund as competition to our stake in Vodafone Egypt with its Qatari sovereign counterpart.

As the end of the current year approaches, which some have characterized as the most difficult, and the sector continues to achieve high growth rates, some experts in the sector expected that the communications and information technology sector will witness the continuation of the succession of Arab funds. for the Egyptian market during the coming period, citing several key reasons, the most important of which is that the Sector reaps annual profits, in addition to the competitive prices of Egyptian assets, due to periodic exchange rate movements carried out by the Fed, in addition to the fact that Egypt is a central market that receives 17% of global amount of data.

dr. Amr Badawy, former head of the Telecommunications Regulatory Authority, said that the telecommunications sector in Egypt has achieved significant growth rates, after the country continued with an ambitious digital transformation plan, and the general trend of infrastructure development by the entire Ministry of Communications.

Badawi emphasized the need for continuous review of the legislation regulating the telecommunications market, thereby increasing the prospects for attracting new investments, pointing out that the telecommunications sector is currently one of the tributaries of the Egyptian economy according to the growth rates it achieves.

Hisham Al-Alayli, the former head of the Telecommunications Regulatory Authority, expected that the telecommunications sector in Egypt will witness the influx of numerous investors in the coming period, stressing that this depends on the need to restructure the law on investments, which in turn will contribute to sending messages of reassurance to incoming investors in the sector. telecommunications.

Al-Alayli stressed that data centers are one of the most vital and active sectors in the telecommunications sector, which is characterized by a large return on investment in it, stressing that it is necessary to work on securing all the necessary funds to attract this type of investment, first of all the establishment of free zones subject to a special law on investments next to the landing sites Submarine cables, with the aim of providing a suitable environment for companies that want to build data centers for them within the Egyptian territory.

He pointed out that the Egyptian state has many ingredients that contribute to giving it a strategic position that makes it a regional center for attracting large technological projects, the first of which is the establishment of data centers, explaining that 17 percent of the global amount of data passes through Egypt.

In a related context, Dr. Hamdi Al-Laithi, Linatel’s CEO of Communications Network Solutions, predicted that Gulf investors could find promising opportunities in the sector through two axes, be it launching new projects or acquiring minority stakes in existing ones. companies in the sector.

He pointed out that Egypt has taken accelerated steps in digital transformation projects, which will contribute to changing the compass of investments in the sector in the coming period, explaining that the Egyptian market is still in a state of readiness and should receive investments. and has not yet reached saturation.

El-Leithy pointed out that there are many technological fields that will witness the demand of state funds and international technology companies, the first of which are infrastructure projects and Internet of Things projects that will contribute to a radical change in the telecommunications sector in Egypt.

He added that the four mobile operators could become the focus of attention of global entities and investment funds, citing the huge mobile market in Egypt and the growth of the number of users in the recent period, along with the huge returns that these companies make to Egypt.

He expected that the telecommunications sector in Egypt will witness the arrival of a newcomer as a fifth operator in the coming period, especially in light of the huge increase in data due to the digital transformation process, which may require the issuance of a fifth generation license, and the works are expected to be activated by 2025.

El-Leithy emphasized the need to work on the adoption of legislation and laws on fixed investments, along with work on facilitating all legal procedures for the start of technological projects that Egypt could witness in the coming period.

He emphasized the need for Egyptian embassies and agencies to present a program for international companies in European countries, including the most active and growing technological areas in Egypt, with the aim of guiding investors in the right direction, proposing the launch of official websites that will contribute to promoting this step.

On the other hand, Ayman Abu Hind, co-founder and investment manager of the American investment company Advisabl, added that the communications and information technology sector will probably witness an influx of new investors in the coming period, due to exchange rate changes. , which make property prices competitive for investors.

He pointed out that Egyptian companies operating in the telecommunications sector have achieved significant growth rates in recent years, which increases the chances of attracting Gulf and international investments in the coming period.

He pointed out that the Gulf investment strategy has undergone a change in the coming period, which is reflected in the purchase of shares in some Egyptian technology companies, including “Fawry” and “e-Finance”.

Abu Hind suggested that Telecom Egypt’s stake in Vodafone International would go to the Qatari Sovereign Fund, which is expected to be the highest bidder among the bidders who have expressed a desire to acquire a stake in the company.

He ruled out the concession of minority or majority shares of either Orange or Etisalat to an investor in the upcoming period, considering the expansion and regional plans that these companies are realizing in the region during the current period.

He emphasized that the continuation of the state plan to automate the state and promote digitization in all services will contribute to attracting numerous investments with the desire that the Egyptian state participate in strengthening the state and completing the digital system of Egypt.

Haitham Waguih, a member of the Board of Directors of the Egyptian Association for Direct Investment, expected that the investment map in the telecommunications sector in Egypt will witness the receipt of many Arab state funds during the coming period, citing the growth rates achieved by the telecommunications sector that make it the center of attention of investors.

He pointed out that investment funds believe that Egypt is among the countries that still need more investment in the telecommunications sector, citing the plan implemented by the Egyptian state.

He explained that the exchange rate is one of the most important key factors that play a role in the flow of capital from the Gulf to the Egyptian market, noting that if the exchange rate changes, it will affect the competitiveness of asset prices.

Hisham Hamdy, a communications analyst at Al-Naeem Investment Bank, expected Egypt’s telecommunications sector to see new arrivals over the next year, particularly in the areas of communications towers and data centers, which have begun to witness a boom due to digital transformation.

Hamdy attributed the reason for the general trend of foreign investors in data centers to Egypt’s strategic location and the possession of more than one submarine cable, along with the existence of a suitable climate that enables data centers to be launched in Egypt.

He pointed out that the telecommunications sector in Egypt is achieving high growth rates, especially in the light of the increasing number of Internet users, explaining that this sector in Egypt will continue to receive new players in the coming period.

He explained that the digital transformation projects that the state is currently implementing are the biggest factor for the arrival of international companies and state funds in Egypt, explaining that the state’s exit from some sectors increased the chances of attracting private global entities to telecommunications. market in Egypt.

It is noteworthy that the Minister of Communications, Dr. Amr Talaat, announced that the total spending on information technology worldwide is expected to reach about $4.5 trillion by the end of 2022, an increase of 5% compared to 2021. year.