Egypt Reforms: An update from the ICT Sector. Tarek Kamel Minister of Communications & Information Technology June, 2006

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1 Egypt Reforms: An update from the ICT Sector Tarek Kamel Minister of Communications & Information Technology June, 2006

2 Content Egypt s Political and Economic Reform The ICT Sector as a leading Model Deregulation in ICT Public-Private Partnership Business Environment & Investment Opportunities

3 Egypt A regional hub linking the Mediterranean, Europe, Africa, Asia and the Arab World 72 Million inhabitants with 58% under the age of 25 years Egypt maintains strong and balanced diplomatic relations with all neighboring countries

4 Political Reform Since mid 70s, Egypt has succeeded in putting together the building blocks of a democratic system Egypt is further empowering the democratic process Egypt's first multi-candidate presidential election took place in September 2005 Most competitive elections in parliamentary history in November-December 2005 New Cabinet in January 2006

5 Further Reforms Future Reforms are currently under discussion among stakeholders:- Enhancing Judiciary independence More oversight authority for Parliament over Government Decentralization & Empowerment of Local Administrations Increasing representation of women in Parliament New law for Terrorism instead of State of Emergency New Electoral Law to improve electoral system

6 Economic Reform Agenda Competition is the organizing principle of economic reform Building the institutional and regulatory framework for a successful market economy Competition Commission Consumer Protection Agency Customs reform in September 2004 Simplification of customs procedure Tax reform in June 2005 Reduction of tax rate up to 50%

7 Economic Reform Pays-Off GDP growth of 6.1% Reduction of inflation rate to 3.1% Real Income increased by 15-20% EGP 20 billion in proceeds of privatization since July 2004 Investments and FDI boom since 2005 Exports surged 23% creating job opportunities

8 Agenda for Further Reforms Further Empowerment of Sectoral Regulators:- A new framework for Audio-visual regulations that enable converged services A new Education Quality Assurance & Accreditation Agency to foster Education reform A new mechanism for inviting private sector participation in reforming the transport sector Reform of water and sanitation sector through the establishment of appropriate regulatory bodies

9 ICT Sector as a Leading Model Deregulation in ICT Public-Private Partnership Business Environment & Investment Opportunities

10 Reform of the Telecom Sector Strategic direction to reform the sector and engage Egypt in the global information society Restructuring subsidies in telecom sector Aligning tariffs with costs of fixed service (April 2006) Activation of Universal Service Fund Privatization of Telecom Egypt Lead by CSFB, EFG-Hermes & CIB in Dec Biggest IPO in the Cairo and Alexandria Stock Exchange (CASE) with a value of around USD 1 billion

11 Egypt becoming a Regional Leader in Mobile Technology Development of Egyptian know-how in the area of design, establishment and maintenance of 2/2.5G networks Development of Orascom Telecom as a regional operator through acquisition of licenses in MENA, Asia and most recently in Europe

12 Introduction of 3G Services through 3 rd Mobile Entrant Deployment of technology neutral 3G networks 11 Consortia of Egyptian, regional and international operators submitting technical proposals 9 Bidders technically qualified Public auctioning of license on 4th of July, 2006 Min. of EGP 2.5 billion as upfront fees Min. of 3% of annual revenues Operations to commence in Q Penetration rate expected to grow from 20% in 2006 to about 45% in 2010

13 Postal Reform Restructuring & Governance of Egypt Post Liberalization & Establishment of Regulatory function Development & Modernization of infrastructure Post as a delivery arm for financial and e- government services Building on the trust with the citizens in maximizing the utilization of their postal savings

14 Further Deregulation of the ICT Sector International Submarine Cabling Systems with landing points in Suez and Alexandria in 2006/2007 International voice gateways (Q4 2006) Cable operators for provision of converged services in Egypt in 2007 Second fixed operator in 2008/2009

15 Public Private Partnerships A Key Strategy for ICT Development

16 New Initiatives Launching the Egyptian Educational Initiative Restructuring the Broadband Initiative Establishing R&D Centers of Excellence Kicking-off Nile University

17 The Egyptian Education Initiative Launched in the meeting of the World Economic Forum in Sharm El Sheikh May 2006 under the auspices of Egypt s First Lady In partnership with leading ICT companies CISCO, Computer Associates, HP, IBM, Intel, Lucent, Microsoft, Oracle, Siemens Working Areas: Pre university education Developing ICT industry Sustainable Education University-level Education First phase to target 820,000 students in 2,000 schools and over 300 faculties in 15 universities

18 Restructuring the Broadband Initiative Establishing a framework for promoting connectivity USD 1/month for local loop unbundling Slashes of 40% of prices in June 2006 Support from USF for rural areas Reductions in connectivity tariffs to reach a wider base USD 17/month for 256 kbps USD 26/month for 1Mbps Promoting provision of media services

19 R&D Centers of Excellence as a base for Innovation Data Mining & Computer Modeling Wireless Technologies Mobile Services & Applications Establishment of virtual centers of excellence in association with multinational and local companies working in Egypt and Egyptian ex-pats General Support: Yearly award for best research Patent filing and IP protection Marketing of innovative ideas Incentives for companies involved in R&D Incentives for researchers

20 Business Environment & Investment Opportunities Fostering ICT Growth Partnerships with US Companies in Egypt Developing a new lct Export Strategy

21 ICT Growth Investment of ICT Companies in Egypt exceeded EGP 35 billion over past 8 years Increase in number of ICT companies to 1594 Current Number of Employees of private ICT companies exceeds 40,000

22 US Companies in Egypt Company IBM Mentor Graphics Intel Microsoft CISCO Regional & Global Support Activities Software Development Center of 400+ skilled IT developers Design Center of 170+ engineers Regional Platform Definition Center Regional Software Enablement Lab Developer Support Center for Regional Developers Software Innovation Center Core competency e-learning institute

23 Positioning Egypt Developing an Export Strategy in ICT services building on Egypt s competencies Egypt ranking 12 on a global index in a study conducted by A.T. Kearney Competencies including: Adequate ICT Infrastructure Government-support training programs Multilingual workforce India China Malaysia Philippines Singapore Thailand Czech Chile Canada Brazil US (Tier II) Egypt Indonesia Jordan Bulgaria Slovakia Mexico Poland Hungary UAE Costa Rica Ghana Argentina Romania Jamaica Vietnam Russia UK (TierII) Australia Tunisia Germany South Africa Israel New Zealand France (Tier Panama Portugal Spain Ireland Turkey

24 Egypt s ICT Exports IT Services Technical Support Centers Contact Centers OpenCraft Arabic Content IT Products R&D/Engineering Design EL MUTAHADA NAHDAT MISR

25 Export Targets Target Revenue CAGR R&D/Engineering KPO Services Localization Arab Content BPO Services $100 m $30 m $40 m $200 m $75 m 38% 43% 22% 46% 72% Technical Support$200 m 27% Contact Centers IT Products* $115 m $45 m 50% 25% IT Services $280 m 27% USD 1.1 Billion

26 Thank You

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