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Huawei entrenches competitive advantage in Egypt

Huawei entrenches competitive advantage in Egypt

Chinese multinational helps Telecom Egypt secure US$200 million loan facility.

Telecom Egypt has confirmed that ICT multinational Huawei played an instrumental role in helping it secure a US$200 million loan from the Bank of China as well as the China Export & Credit Insurance Corporation.

The telco plans to use the loan, which the company must repay within four years, to support the roll out of its 4G network.

Ahmed El Beheiry, MD and CEO of Telecom Egypt said Huawei helped to ensure "competitive financing conditions" as part of the loan agreement, but added that the Chinese multinational would also benefit from the deal.

"Our success in securing such financing agreement with the Chinese financial institutions and Huawei indicates our strong financial position and credit profile and marks the first of its kind in the telecom sector. The facility benefits Telecom Egypt by providing a simplified purchasing process through a packaged financial solution, while it allows Huawei to further expand its business in Egypt."

Terry Liu, CEO of Huawei's Egypt Office said, "Today, we are taking another step towards strengthening this partnership and supporting Telecom Egypt in their strategy to expand by facilitating the financing agreement."

Steven Ambrose, CEO of Strategy Worx Consulting believes that while Telecom Egypt's latest financial agreement is nothing out of the ordinary, it does give Huawei the upper hand in terms of future tenders and projects.

"Huawei has always worked very closely with the Chinese banks in massive infrastructure projects. The financing of projects related to infrastructure such as road, railways and telecommunication are often financed by Chinese banks in conjunction with Chinese companies who do the work. By providing finance Huawei are often preferred in their bids for such projects. The finance terms are also often very advantageous. Huawei win tenders and the Chinese banks also benefit."

Ambrose adds that this latest move to finance Telecom Egypt is commercially advantageous to Huawei and China overall and that it does reduce competition from companies that are not in a position to offer similar packages to that of Huawei and its alliance partners.

"This is in fact one of the reasons Huawei has grown to be the largest telecommunication supplier in only a few years," said Ambrose.

This agreement takes place a few weeks after Telecom Egypt secured a US$200 million short-term loan facility from the African Export-Import Bank. El Beheiry said that loan would be used to finance working capital and investments in the company.

Telecom Egypt also announced that its subsidiary, Egyptian International Submarine Cables Company (EISCC), had executed a Sale and Purchase Agreement with Orascom Telecom Media and Technology Holding for the purchase of shareholding in Middle East and North Africa Submarine Cable (MENA) for US$90 million last month.

The purchase was funded by a cut of the dividend payout from the last financial year.

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