CAIRO: If the traditional ADSL internet providers aren’t looking over their shoulders, they ought to be.
Telecom giant Vodafone thinks it has the recipe to dominate the internet market in Egypt, and as proof it announced Tuesday its intention to buy a majority stake in content provider Sarmady Communications (Sarcom).
The deal, the details of which are being kept strictly under wraps, will greatly expand Vodafone’s ability to support its internet services with content.
It’s all part of Vodafone’s aggressive growth strategy.
Eager to “see what companies might help us accelerate our internet growth,” the company took a broad look at groups that might fit the bill, Jonathan Bill, head of internet and content services at Vodafone, told Daily News Egypt
Sarcom was a clear standout.
“The attraction to Sarcom,” added Bill, “is that they provide the flipside of the internet. We provide the access and they provide terrific content.”
Bill argued that one of the distinct advantages Vodafone has over the traditional ADSL providers is that the rural market is virtually untouched. Part of the reason for this is the difficulty in routing landlines to remote parts of the country.
In addition to its major role in the mobile internet market, Vodafone also offers fixed ADSL access.
The wireless options Vodafone offers, however, it believes gives it a leg over the competition.
It’s Vodafone Live service, for example, serves as a mobile internet portal.
“We absolutely believe that we have a significant place to play in the internet,” said Bill.
Though Vodafone’s purchase of Sarcom serves as a serious indication of the direction internet service is heading, the partnership between these two companies is nothing new.
Bill cites a five year relationship that helped lay the groundwork for this week’s deal. Over the course of the relationship, Sarcom primarily provided sports content to Vodafone.
If Vodafone is successful in its continued efforts to build an internet empire, the potential rewards could be tremendous.
With its desire to provide both access and content, Vodafone has the potential to drive a significant push in advertising revenue.
Sarcom offers a diverse array of content, including FilGoal.com, which had 160 million page views last year alone; ContactCars.com; FilBalad.com; and iCroc.com.
In a statement to the press, Vodafone Egypt CEO Richard Daly said, “This acquisition is pivotal in moving Vodafone into the heart of the internet space in Egypt and we can see both significant opportunities for advertisers and a great experience for consumers as a result.”
Meanwhile, Cornelius O’Donnell, CEO of Sarcom, said, “We are thrilled to be joining forces with a global leader like Vodafone. The investment capacity from Vodafone Egypt coupled with our already strong working relationship will enable us to provide ever-richer content to customers as well as develop digital advertising in Egypt. We believe there are exciting growth opportunities with this expanding industry.”
Telecom Egypt, which owns a 45 percent stake in Vodafone Egypt, said the jump in its latest quarterly results was helped by its stake in the mobile phone operator. Earnings from Vodafone Egypt jumped 25 percent to LE 330 million.
“The mobile market in Egypt is growing and Vodafone is clearly outperforming the other operators,” Telecom Egypt Chairman Akil Beshir told Reuters.
With 15 million current subscribers, Vodafone is the second largest mobile telecommunication company in Egypt.
According to predictions by Research and Markets, by 2010 there will be an estimated 73 mobile phone subscriptions per 100 people, with the total number of subscribers reaching 57.3 million. This signifies more than a 36 percent increase, up from the current wireless penetration level of 56 percent and 42 million subscribers.
In a previous interview with Daily News Egypt, Hany Mahmoud, vice president of Vodafone Egypt, said the company plans to expand beyond its current role to become a “total” telecommunication company. By offering numerous services through one provider, expanding its 3G coverage so less urban areas will have mobile access to wireless internet, and continuing to improve its customer care, Mahmoud said Vodafone hopes to have 20 million customers by the year 2010.