EGYPT: Telecommunications & IT February 2015 Egypt: Telecommunications & IT TABLE OF CONTENTS Map of Egypt .......................................................................................................... 4 Executive Summary ............................................................................................. 5 Industry Structure ................................................................................................ 6 Market Overview ................................................................................................... 7 Figure: Sectoral Contributions to GDP ................................................................................................................................. 7 Figure: Subscribers by Operator ............................................................................................................................................. 8 Figure: Egypt Investment Goods ............................................................................................................................................. 9 Fixed Line Telephony ............................................................................................................................................................. 10 Figure: Mobile Subscription Projections .......................................................................................................................... 10 Figure: Internet Structure ..................................................................................................................................................... 11 Mobile Telephony ................................................................................................................................................................. 11 Figure: Mobile Structure ..................................................................................................................................................... 12 Figure: 3G Share of Global market ................................................................................................................................... 13 Internet Service Providers ................................................................................................................................................. 13 Figure: Fixed Line Structure ................................................................................................................................................. 14 Information Technology and Outsourcing ....................................................................................................................... 14 Figure: International Telecommunications Revenues ................................................................................................... 15 Figure: International Spending Growth by Component ............................................................................................... 16 Key Players .............................................................................................................17 Cisco Systems ........................................................................................................................................................................ 13 Egyptian Company for Mobile Services (ECMS) ......................................................................................................... 17 Etisalat Misr ............................................................................................................................................................................. 17 ITWorx ........................................................................................................................................................................................ 18 Orascom Telecom Holding (OTH) ..................................................................................................................................... 18 Raya Holding ......................................................................................................................................................................... 18 Telecom Egypt (TE) ............................................................................................................................................................. 19 Vodafone Egypt ..................................................................................................................................................................... 19 Economic Overview .......................................................................................... 20 Figure: Economic Forecast ................................................................................................................................................... 20 Figure: Egypt GDP Based on Purchasing Power Parity (PPP) ........................................................................................ 21 Figure: Current Account Balance ........................................................................................................................................ 22 Figure: Government Budget Balance .................................................................................................................................. 22 Figure: Inflation ....................................................................................................................................................................... 23 2 Egypt: Telecommunications & IT Challenges to Industry ......................................................................................25 SWOT Chart ...........................................................................................................26 Projections .............................................................................................................27 Figure: Economic Projections ............................................................................................................................................. 27 Figure: Industry Projections ................................................................................................................................................ 27 Needs Assessment ..............................................................................................28 MENA-Wide Overview ......................................................................................29 Figure: Internet Market in the MENA Region ................................................................................................................. 29 Figure: Social and Governance Indicators ................................................................................................................... 30 Figure: MENA Labour Force Growth ............................................................................................................................. 31 3 Political Risk Services Egypt Country Forecast Reproduction without written permission of The PRS Group is strictly prohibited. Egypt: Telecommunications & IT MAP OF EGYPT Mediterranean Sea Damietta Jordan � Port Said � � � Marsa Matruh Israel Alexandria � ➘ Tanta Suez Canal Suez Cairo ✪ � Al Jizah � Sinai Bani Suwayf � � Siwah Saudi Arabia � Al Minya � Sharm Al Ghardaqah ash Asyut� � Shaykh Bur Safajah� Egypt Nile � Al Kharijah Red Sea Libya � Luxor � Aswan Lake Nasser Hala'ib Triangle Sudan REV2003REV2003 Source : PRS Group Page 2 Map 4 Egypt: Telecommunications & IT EXECUTIVE SUMMARY Egypt has the largest fixed-line market in Africa and the Arab region, and the telecommunications and IT sector is one of the leading sectors in the economy, generating annual revenues of approximately EGP 66 billion and com- prising more than 3% of GDP in 2014, and is projected to contribute EGP 195 billion by 2020. Growth rates are antic- ipated to reach 18%. In 2012/2013 the sector posted an annual growth rate of 13.2%, up from 11.5% in 2011/2012. In 2013, the sector received EGP 46.4 billion investments, up from 45.8 in 2012, and is targeting growth in excess of 14% for the current fiscal year. Egypt’s telecommunications and information technology sector is diverse and growing, comprised of a number of multi-national and domestic companies covering a wide spectrum of service segments, including call centres, software developers, telecoms, internet and infrastructure. During the last decades, the Egyptian economy has made great strides, managing to capitalize on the country’s nat- ural wealth, appeal as a tourist destination and young, educated population to generate economic growth, industry and investment in key economic sectors. Although Egypt’s legacy of state socialism and political authoritarianism has hindered the country’s ability to build an equal opportunity economy, the Egyptian government has, in recent years, shown a willingness to cooperate with local and international investors to facilitate economic expansion, and to engage in public-private partnerships to push forward infrastructure and other development projects. Egypt’s economic progress has stagnated, but despite on going political instability, the conditions that made the country’s recent economic success possible persist. The greatest hindrance to the growth of Egypt’s telecommunications and IT sector is a lack of infrastructure devel- opment, primarily stemming from the absence of adequate public private partnerships. Egypt’s fibre-optic cables network is concentrated in the hands of state-owned Telecom Egypt, which significantly hampers the expansion