Communications Minister Tarek Kamel said that in addition to the initial license fee, the winning consortium would pay the government 6% of its revenues instead of the 3% minimum that the government had stipulated.

Egyptian Prime Minister Ahmed Nazif said the high bid was a show of confidence in the Egyptian economy. The government is hoping that privatisations and license fees will help reduce a budget deficit estimated at around 8% of gross GDP in 2006/7.

In addition to the license fee, the winning consortium will invest about US$ 1 billion to set up its mobile network, creating total additional direct investment of US$ 4 billion, Nazif added. Kamel said Etisalat and its partners would have the system up and running by February 2007. Etisalat's partners in the bid are the Egyptian Post Office, state-owned National Bank of Egypt and Commercial International Bank (CIB), a private-sector Egyptian bank.

Nine consortiums competed in the auction and the minimum bid permissible was US$ 435 million. Etisalat’s bid was the highest by a significant margin and was followed by a US$ 2.47 billion bid by MTC of Kuwait and Egyptian investment bank EFG-Hermes. The third-highest bid, at US$ 2.12 billion, was from a consortium led by Qatar Telecom, followed by a US$ 1.93 billion joint bid from majority state-owned Telecom Egypt and Telecom Italia. Brokers had said they expected the license to sell for at least US$ 1.04 billion pounds, and possibly as much as US$ 1.74 billion.

Source: Reuters - WDR/Intelecon Regulatory News