Innovation and infrastructure support rollout of Egypt's 4G LTE network

Since launching commercial 4G LTE licences in late 2017, the country’s four mobile operators – Orange Egypt, Vodafone Egypt, Etisalat Misr and Telecom Egypt’s WE – have rolled out LTE services in most urban areas. They are quickly bringing the country on par with global standards through innovative partnerships and network infrastructure investments.

Licence Negotiations

LTE services have been a gamechanger for Egypt’s mobile services industry, allowing operators to keep pace with data usage increases. Orange was the first private operator to secure a 4G licence, for $484m, in October 2016, and Vodafone and Etisalat quickly followed suit. However, months of delays followed thereafter due to disputes with the National Telecom Regulatory Authority centred around payment terms. The issue was eventually resolved and LTE services were successfully launched in September 2017.

The industry has not looked back. By late 2018 LTE services had already reached a large portion of the population, although there appear to be significant discrepancies between operators. Egypt’s mobile operators do not typically publicly disclose their 4G coverage statistics; however, in May 2018 Orange announced to local media that its LTE services cover over 60% of the population.

According to some sector players, the rollout of LTE services is already bearing fruit. “It is safe to estimate that mobile data traffic has grown between 45% and 50% across the market over the last year,” Amr Morsy, corporate strategy senior manager for Vodafone Egypt, told OBG. Financial reports provide further insight into this growth. For example, TE’s revenues from data services for the second quarter of 2018 increased by 45% year-on-year (y-o-y). Etisalat, meanwhile, reported a 21% y-o-y increase in revenue in the first quarter of 2018.

Capacity Constraints

Expanded data use, although a significant driver of revenue increases, is now testing the capacity of Egypt’s LTE spectrum. According to a report by the GSM Association, a trade body that represents mobile network operators globally, monthly data use per subscriber in the MENA region is forecast to grow substantially, from an average of 1 GB in 2016 to almost 12 GB in 2022. Planning ahead, all four operators have already made formal requests to the regulator for additional spectrum. However, Alaa Zaher, head of strategy and innovation at Vodafone Egypt, told OBG that “spectrum is a scarce resource and freeing it could be a lengthy process”.

Investments & Innovations

Telecom operators are also investing in network upgrades to support their LTE service rollouts. For example, TE secured a $200m loan from Chinese financial institutions in May 2018 to deploy transmission lines and core networks for its 4G network. There has also been an encouraging focus on innovation to prevent spectrum bottlenecks. In March 2018 Etisalat partnered with Chinese telecoms multinational Huawei to carry out the world’s first trial of the CloudAIR GL15MHz spectrum dynamic sharing system, which could increase LTE data speed by around 20%. Growing demand for high-speed LTE services is also creating opportunities for new services and products. In September 2018 Etisalat, in partnership with Swedish firm Ericsson, started offering the first commercial voice over LTE (VoLTE) services in Egypt, in a move aimed at satisfying its customer support base. VoLTE services enable voice calls over the 4G network, thereby vastly improving call quality.

There is also increasing demand for 4G compatible devices in Egypt, which is supporting local manufacturing. To take an example, SICO Technology, an Egyptian tech manufacturing firm, started selling a locally-produced LTE compatible smartphone in January 2018 and already has plans to export the device to the rest of Africa and the MENA region.