Mobinil, which has delayed applying for a 3G license for a year citing unattractive license terms, said discussions were ongoing to resolve the dispute. A 3G license would cost around US$ 580 million.

"The NTRA (National Telecom Regulatory Authority) has requested that Mobinil stop offering enhanced data services on EDGE, based on an understanding that it is a 3G technology which requires licensing," a Mobinil spokesperson said.

Mobinil -- majority-owned by Orascom Telecom -- said it has an understanding with the government that it could continue to use EDGE as long as discussions were ongoing. Mobinil started EDGE trials in Egypt early in 2006 and its services are now offered in major cities and airports.

"Mobinil maintains the position that EDGE is an enhanced version of GPRS and that both are second-generation technologies that do not require further licensing," the spokesperson said.

Egypt's two existing mobile operators -- Mobinil and Vodafone Egypt -- would have to pay approximately US$ 580 million for 3G licenses because the price for the license is linked to the winning bid for Egypt’s third mobile operator license. The third mobile license was sold at auction last month to Etisalat for US$ 2.9 billion. The resulting price that the existing operators would have to pay for 3G prompted Egyptian investment bank EFG-Hermes to lower its long-term fair value share price estimates for the two existing mobile operators.

Mobinil rival Vodafone said it was evaluating whether to buy a 3G license and was discussing the terms with regulators.

Source: Reuters - WDR/Intelecon Regulatory News