GOE OFFERS TENDER DOCUMENT FOR THIRD MOBILE

UNCLAS CAIRO 001288

SIPDIS

SENSITIVE

STATE FOR NEA/ELA AND EB/CIP
USTR FOR SAUMS/AUGEROT/MCHALE/NEUREITER
USAID FOR ANE/MEA MCCLOUD
COMMERCE FOR 4520/ITA/MAC/ANESA/TALAAT
FCC FOR INTERNATIONAL BUREAU/COOPER

E.O. 12958: N/A
TAGS: ECON ECPS EINT EINV ETRD EG KGIT
SUBJECT: GOE OFFERS TENDER DOCUMENT FOR THIRD MOBILE
PROVIDER

REF: CAIRO 00776 (NOTAL)

Sensitive but Unclassified. Please protect accordingly.


1. (SBU) The GOE's National Telecommunications Regulatory
Authority (NTRA) on February 19 made available instructions
for bidders on the proposed third mobile telephone licence
(reftel). According to press reports, as of February 27, 17
companies had purchased the tender document, or the "Network
Specifications Handbook," at a cost of $25,000 each. Press
suggests that among the 17 are the GOE-controlled Telecom
Egypt (TE),and private Egyptian firms Raya Holdings,
National Telecommunications Corporation, and Teletech.
International corporations AFK Sistema (Russia),Etisalat
(UAE),Mobile Telecommunications Corporation (Kuwait),and
Mobile Telephone Networks (South Africa) reportedly are also
among those who paid for the document. NTRA will sell the
license by auction, at a starting bid of LE 2.5 billion, or
approximately $439 million. (Comment: As per reftel, we
still lack confirmation of a consortium among TeleTech,
Sprint, and Nextel, but the expenditure of $25,000 suggests
TeleTech has obtained a commitment from international
partners. However, we expect the auction format to favor
bidders willing to spend large amounts of capital up front -
i.e., investors from the oil-rich Arabian Gulf. End comment.)


2. (U) NTRA offered the tender on a technology neutral basis
- i.e., either GSM or CDMA technology would be acceptable -
and required the winner provide 3G-2G service. Bidders
reportedly will each put up $4.4 million as a guarantee,
forfeited to NTRA if they win the contract and then withdraw.
NTRA will host a bidders' conference on March 8, the
deadline for sumbitting proposals is April 17, and NTRA will
complete evaluation of proposals within the following eight
weeks. Preference will be given to consortia including an
Egyptian partner, and to firms willing to trade a portion of
shares on the Cairo and Alexandria Stock Exchange after two
years of operation, according to press.


3. (U) New NTRA Executive President Amr Badawi announced
that the tender document includes provisions for domestic
roaming service in uncovered areas, at least initially, via
the existing infrastructures of current telecommunications
providers TE, MobiNil, and Vodafone (i.e., TE-owned landline
infrastructure, and MobiNil- and Vodafone-owned cellular),as
well as number portability. However, press also indicates
that the tender protects existing commitments between NTRA
and the current mobile providers MobiNil and Vodafone.
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