Telecom Egypt strikes $28.6 million services deal with Etisalat

Egyptian fixed-line incumbent Telecom Egypt has signed a deal to provide transmission services to Etisalat Misr, the country’s number-three mobile operator and a subsidiary of United Arab Emirates giant Etisalat.

In a statement, Telecom Egypt (Cairo, Egypt) says the “long-term” agreement gives Etisalat (Cairo, Egypt) the right to use transmission services across its network immediately, citing the value of the contract as EGP200 million ($28.6 million) annually.

Egyptian fixed-line incumbent Telecom Egypt has signed a deal to provide transmission services to Etisalat Misr, the country’s number-three mobile operator and a subsidiary of United Arab Emirates giant Etisalat.

In a statement, Telecom Egypt (Cairo, Egypt) says the “long-term” agreement gives Etisalat (Cairo, Egypt) the right to use transmission services across its network immediately, citing the value of the contract as EGP200 million ($28.6 million) annually.

The deal is likely to have represented a better option for Etisalat than making costly investments in its own fixed-line infrastructure.

Mobile operators around the world have struck similar deals to provide a ‘backhaul’ option for their mobile traffic.

Indeed, as usage of mobile data services grows, so is the need for high-speed, fiber-based connections as a backhaul solution.

“Our agreement with Etisalat Misr is reflective of the continued strength of our infrastructure and the resilience of the Eygptian telecom market as a whole,” said Mohamed Elnawawy, the chief executive of Telecom Egypt. “In choosing to rely on our capability and track record, Etisalat Misr will become an important customer, whose growing need for capacity in Egypt we fully expect to be able to satisfy.”

Operators are investing heavily in the rollout of high-speed mobile networks under pressure from Egyptian authorities, whose national broadband plan includes targets of providing 3G services to 90% of the country’s population by 2015 and LTE to the same percentage by 2012.

State-backed Telecom Egypt has been funneling investments into broadband rollout to satisfy regulatory objectives.

For the three months ending March, Telecom Egypt reported a 6% decline in net profit, compared with the same period of 2012, although revenues grew by 1.4%.