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Egypt needs billions to upgrade telecom infrastructure

Egypt needs billions to upgrade telecom infrastructure.

Egypt is seeking billions of dollars in investment to upgrade its telecommunications infrastructure as part of efforts to attract multinationals and restore growth after three years of political upheaval, the telecoms minister said.

Political unrest, protests and militant violence since the 2011 uprising that ousted Hosni Mubarak has battered Egypt's finances, spooking investors from the most populous Arab country which needs to create growth and much-needed jobs.

Atef Helmy said Egypt needs investment of $5-$6 billion to build broadband internet across the nation and some $3 billion more to build seven technology parks it hopes will lure multinationals and provide employment.

Some of these opportunities will be presented at an economic summit aimed at encouraging investment in Egypt that will be held in February in the resort town of Sharm al-Sheikh.

"There is no doubt that the telecoms and technology sector is one of the most competitive sectors when it comes to investment and as part of building our new Egypt...(it) is a cornerstone," he said in an interview as part of the Reuters Middle East Investment Summit.

Helmy, himself an executive with Oracle, said Egypt had managed to retain big multinationals, including his former employer, despite the recent turbulence.

The Smart Village, a technology park of manicured lawns and water features outside the sprawling capital, is home to the gleaming offices of major international firms as well as the Communications and Information Technology Ministry; a testament to the kind of Egypt Helmy wants to build.

Recently returned from Dubai, where he met with executives from Gulf firms as he seeks to drum up interest in Egypt, Helmy said his country offered much untapped potential, with the penetration rate for high-speed internet at a paltry 15%.

"For high speed internet, for each 10% penetration this creates between 50,000-60,000 jobs... so you can just imagine the impact economically," he said.

"You cannot develop... education and health without having this infrastructure in place."

Telecom license

As part of efforts to reform the sector, Egypt's government approved a long-awaited plan in September to issue a unified landline and mobile telecoms license, opening the way for fixed-line monopoly Telecom Egypt to offer mobile services.

The state operator agreed in May to pay 2.5 billion Egyptian pounds ($350 million) for permission to offer mobile services, but the new rules have yet to come into effect after repeated delays, raising concerns that major sticking points remained.

Helmy said the regulator was still finalising some details and the license would be activated within weeks.

"The work is going on and we are expecting within the coming few weeks to be able to finalise everything and announce it," he told Reuters.

Egypt's three existing mobile service providers, Vodafone Egypt, Mobinil and Etisalat Egypt, have been eating away at Telecom Egypt's business as more Egyptians opt to use mobile phones and the internet instead. Telecom Egypt has been waiting to launch a new mobile operation to rival other players.

It already owns a 45% stake in Vodafone Egypt, but the government has said it would have to sell its Vodafone stake by December 2015 as part of the license deal.

The unified license law also stipulates the creation of a new company dedicated to developing Egypt's telecom infrastructure, a key role so far carried out by Telecom Egypt.

Helmy said military-controlled companies would have an important role in that new infrastructure company but denied that the army would have a controlling stake, with existing phone companies and other firms also involved though their precise roles were still to be determined.

Egypt's military, whose budget is not made public, has long played an important role in the economy, and controls companies producing everything from bottled water to tablet computers.

It is seen by many Egyptians as more efficient than the government, but critics say its role is not transparent and complain that it crowds out the private sector by taking the lead on key infrastructure projects such as those the telecoms and technology sector so desperately needs.

"They are a huge customer so they are not coming because they are defense or whatever but because they are a big customer for this company," Helmy said.

"None of this has been finalised... everything will be clear in the coming weeks."

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