ITU

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ITU Strategic Management Workshop 20 December 2005
TE Marketing Strategy www.telecomegypt.com.eg San
aa Soliman Marketing Director
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Agenda

• Overview of Telecom Egypt
• History and Strategy of Telecom Egypt
• Marketing Strategy
• Conclusion

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Overview of Telecom Egypt Fast Growing
Economy in the Middle East
GDP Growth

• Selected Statistics (December 2004)
• Population 70m
• Nominal GDP 77bn
• GDP per Capita 1,094
• Fixed Line Penetration 13.6
• Fixed Line Subscribers 10.3m
• Mobile Penetration 10.8
• Mobile Subscribers 7.6m

2004-08 Real GDP CAGR
Source Global Insight, Q2 2005.
Fixed Line Penetration
Note Data as of 2004 Year End. Source Telecom
Egypt, Global Insight, Mobinil, Vodafone Egypt.
Source Analysis, International
Telecommunications Union.
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Overview of Telecom Egypt Sole Fixed Line
Operator in Egypt
Players
Recent Developments

• Telecom Egypt is the sole operator in the voice
  segment
• 200 ISPs in the internet segment
• TE sole network operator

• Liberalised, but no alternative network operators
  to date

Domestic Fixed Line

• Telecom Egypt sole provider international access

• To be liberalised in January 2006
• 2 new international gateway licenses to be
  offered

International

• Mobinil
• Vodafone Egypt

• Third mobile license to be issued in 2006

Mobile
Source Telecom Egypt.
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History and Strategy 150 Years of History
1854 1881 1957 1998 2003 2003-05 2005

• First telegraph line established between Cairo
  and Alexandria
• First telephone line between Cairo and Alexandria
• The Arab Republic of Egypt Telecommunications
  Organisation (ARETO) established as the exclusive
  provider of all telecommunications services in
  Egypt
• Transformed into a joint stock company and
  renamed Telecom Egypt
• Telecom Regulatory Agency (TRA) established,
  later renamed National Telecom Regulatory Agency
  (NTRA)
• Law 10 mandated the liberalisation of
  international access by 1 January 2006
• Acquired and increased minority stake (currently
  at 25.5) in Vodafone Egypt
• Telecom Egypt issued the largest corporate bond
  in Egypt to date, raising EGP 2 billion

Source Telecom Egypt.
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Marketing Strategy

• Key strategic goal is to grow revenues and
  maintain or improve profitability
• Telecom Egypt has segmented its customer base in
  order to align its sales and marketing efforts
  more closely to the products and services
  appropriate to each segment
• Migrate customers from less profitable segments
  to more profitable ones through bundling strategy
  and other marketing incentives
• Telecom Egypt aims to achieve its strategic goals
  by focusing on three main areas
• Pricing
• New and improved products services (including
  bundled offerings)
• Enhanced customer experience

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Marketing Strategy
Strategy
Programme

• Pricing Strategy
• Rebalanced tariffs to reflect cost of service
• Maintain competitive long-distance and fixed to
  mobile tariffs relative to mobile tariffs
• Evolve toward flatter pricing for volume
  customers
• Win back traffic from mobile substitution

• Managed IP-Voice flat tariff schemes
• Volume tariffs
• Post Liberalisation
• Introduce bundled offerings of subscription and
  inclusive minutes
• Contract commitments for volume lines with
  reconciliation at period end

• New and Improved Products and Services
• Align TDM and NGN IP services platform to ensure
  consistent product definition, price and
  profitability
• Develop Value Added Service bundles to stimulate
  voice traffic
• Develop a single branded portfolio of bundled
  voice and data services leveraging common
  distribution, customer care and billing

• Segment driven
• Ongoing
• Large and medium enterprises multi-site managed
  voice and data solutions with dedicated or
  shared business solutions
• All subscribers develop Value Added Services
  bundles which stimulate voice traffic
• All subscribers Development of a single branded
  portfolio of bundled voice and data services
  leveraging common POS, Customer Care and Billing

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Marketing Strategy
Strategy
Programme

• Enhance Customer Experience
• Build the technical capability, process and
  training to retain customers

• Segment driven
• Ongoing
• Develop segment specific customer care
• Enterprises Appointment of skilled Key Account
  managers to deal with all requirements, including
  business sector specialisation
• Individual subscribers - offer enhanced web-site
  segmented by subscriber type with improved
  facilities including ordering and activation of
  VAS
• More Customer Service outlets in better locations
• 24 x 7 Customer Contact Centre offering service
  ordering, fault reporting, information services
• Adopt Customer Service Assurance Programme for
  all customers with eventual shift to compensation
  backed Service Level Agreements for large
  customers

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TE Data Strategy

• Short term
• Aggressively acquire ADSL customers and grow
  market share to capitalise on the current growth
  in the market
• Provide service differentiation through cutting
  edge customer service, support and high speed
  connections
• Medium term
• Retain Existing subscribers, reduce churn and
  increase ARPU by increasing customer stickiness
  through VAS (e.g., IPTV, VoIP, broadband gaming)
• Long term
• Single billing
• Postpaid / prepaid billing
• Metered / limited bandwidth services

Source TE Data.
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CAT Strategy

• Target high value residential and corporate
  customers
• No teledensity obligations or targets
• Focus on high value customer segments with higher
  ARPU rather than on market share
• Compete on quality rather than price by offering
  superior customer care, innovative packaging and
  rapid response time
• Begin by targeting business customers requests
  (new as well as from existing waiting list) and
  offer attractive packages for business customers
• Serve corporate customers through a direct sales
  force. Serve residential customers through an
  indirect distribution network of 3,000 shops
  nationwide (distributors of prepaid cards, CPEs,
  etc.)

Source Telecom Egypt.
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Conclusion

• Key elements of value creation strategy
• Increasing ARPL
• Tariff rebalancing
• Addressing competitive threats
• New services (broadband and IP services)
• Exploit TEs position as only fixed line network
  operator in Egypt
• Optimise asset base
• Disciplined capex strategy
• Targeting profitable new customers
• Exploit growth opportunities in new geographic
  markets (Algeria) and new product
• offerings (triple-play)
• Cultural shift from supply-based to
  demand-oriented organisation
• Transitioning Telecom Egypt to face the
  challenges of a progressively more liberalised
  market

Source Telecom Egypt.