Communications policy

Regulatory and institutional structure

Summarise the regulatory framework for the communications sector. Do any foreign ownership restrictions apply to communications services?

Egypt is one of the three largest economies in Africa and is strategically positioned at a crossroads between the East and West, making the country a significant player in international trade in the Middle East and Africa region. Egypt is home to the Suez Canal, which connects the Mediterranean Sea with the Red Sea and is a key artery in global trade.

The total area of Egypt is 1,001,450 square kilometres, including 995,450 square kilometres of land and 6,000 square kilometres of water. According to the Egyptian Central Agency for Public Mobilisation and Statistics, the population reached more than 100 million people in 2020. Egypt is divided into 27 governorates, 217 cities and 4617 villages. The governorates with the highest population are Cairo (10.8 per cent), Giza (8.6 per cent) and Sharqiyya (7.4 per cent).

The Egyptian government has been working hard to attract more foreign direct investment (FDI) to the country, and these efforts resulted in recognition for Egypt as one of the top five destinations globally for greenfield FDI in 2016. Also, in 2016, Cairo was named as one of the top 10 cities in the world to found a tech-start-up.

According to the latest ‘fDi Report 2020’ issued by fDi Intelligence:

 

Egypt replaced South Africa as the second ranked destination by projects in the region, experiencing a 60 per cent increase from 85 to 136 projects

 

This ranking covers both Middle East and African regions. Software and IT services are the top project sectors.

Furthermore, Egypt also managed to top all ranked countries in Middle East and African regions for capital investment in 2019 by acquiring 12 per cent capital investment with a total value of $13.7 billion. 

The telecom sector in Egypt is mainly governed by the Telecoms Law (10/2003). In addition, there are several other key laws and regulations related to the telecom sector, including the following (as amended to date):

  • Penal Code (58/1937);
  • Presidential Decree (236/1985) approving the International Telegraph (currently Telecommunication) (ITU) Convention, which ITU Convention entered into force in Egypt as of 10 October 1985;
  • Presidential Decree (379/1999) regulating the Egyptian Ministry of Communication and Information Technology (MoCIT);
  • E-signature Law (15/2004) and its Executive Regulation;
  • Economic Court Law (120/2008); and 
  • Cybercrime Law (175/2018).

 

The National Telecommunication Regulatory Authority (NTRA) is mainly empowered by the Telecoms Law to regulate and enhance telecommunication services in Egypt. In addition to NTRA, other key entities are involved in the telecom sector:

 

  • MoCIT is empowered by the Presidential Decree (379/1999) to, inter alia, expand, regularly develop and improve communication and information services as well as encourage investment in the telecoms sector based on the antitrust basis;
  • the Information Technology Development Agency (ITDA) is empowered by the E-signature Law to, inter alia, promote and develop the information technology and communication industry, support small and medium-sized enterprises in using e-transaction and regulating e-signature services activities; and
  • the Economic Court has executive jurisdiction over settling litigation related to the Telecoms Law. 
Authorisation/licensing regime

Describe the authorisation or licensing regime.

By virtue of the Telecoms Law, no one is allowed to establish or operate any telecom network, provide any telecom service to third parties, transmit international calls or announce doing so unless a licence is obtained by NTRA.

The term telecom is defined by the Telecoms Law as ‘any means of sending or receiving signs, signals, messages, texts, images or sounds of whatsoever nature and whether the communication is wired or wireless’. 

The restriction above does distinguish between the different types of telecom services and includes one exception only for establishing or operating a private network that does not any use wireless system.

In practice, telecom services are generally classified as follows:

 

Main service

Sub-service

Fixed services

Fixed telephony

Virtual fixed telephony

Access

International services

International gateway

International submarine cable

Data services

Class A

Class B

Class C

Global peering

Registrar

Cellular

Mobile services

Bulk SMS (one to many)

VAS

Wireless trunk

Nilesat

VSAT

Satellite services

GMPCS

 

Navigation services (aviation/maritime)

Infrastructure leasing

Infrastructure

Towers

AVL

 

Accounting authorities

 

Wireless institutes

 

 

The licence of each telecom service allows the relevant licensees to provide such service within a very specific scope.

Generally, all licences are granted by virtue of a licence agreement with NTRA noting that all licences for major services (eg, fixed telephony and cellular) are granted by NTRA through a bidding process. However, the other licences may be granted by NTRA upon request. This request is required to be assessed from different perspective including, inter alia, the market demand and the financial and technical adequacy of the applicant.

Licences are granted for a period between one and 15 years, depending on the services that are the subject of such licences.

NTRA applies a different fee structure for issuing licences for each type of service as per the following examples:

 

Service

Applicable fees and security

Wireless infrastructure leasing

  • A one-time licensing fee of 50,000 Egyptian pounds;
  • 3% of the total annual revenues;
  • a licence burden annual fee of 10,000 Egyptian pounds plus the inflation rate declared by the Central Bank of Egypt (CBE); and
  • a performance bond of 500,000 Egyptian pounds.

Registrar

  • A one-time licensing fee of 50,000 Egyptian pounds;
  • 3% of the total annual revenues;
  • a licence burden annual fee of 10,000 Egyptian pounds plus the inflation rate declared by CBE; and
  • a performance bond of 20,000 Egyptian pounds.

GMPCS

  • No one-time licensing fee;
  • 3% of the total annual revenues;
  • a licence burden annual fee of 1,000 Egyptian pounds plus the inflation rate declared by CBE;
  • annual charges for the equipment of the licensee’s subscribers; and
  • a performance bond of 150,000 Egyptian pounds.

Access

  • A one-time licensing fee of 1 million Egyptian pounds;
  • 8% of the total annual revenues;
  • a licence burden annual fee of 500,000 Egyptian pounds plus the inflation rate declared by CBE;
  • annual charges for the equipment of the licensee’s subscribers; and
  • a performance bond of 50 million Egyptian pounds.

Class A

  • No one-time licensing fee;
  • 3% of the total annual revenues;
  • a licence burden annual fee of 10,000 Egyptian pounds plus the inflation rate declared by CBE; and
  • a performance bond of 500,000 Egyptian pounds.

Class B

  • No one-time licensing fee;
  • 3% of the total annual revenues;
  • a licence burden annual fee of 10,000 Egyptian pounds plus the inflation rate declared by CBE; and
  • a performance bond of 150,000 Egyptian pounds.

Global peering

  • No one-time licensing fee;
  • 3% of the total annual revenues;
  • a licence burden annual fee of 10,000 Egyptian pounds plus the inflation rate declared by CBE; and
  • a performance bond of 200,000 Egyptian pounds.

Bulk SMS (one to many)

  • A one-time licensing fee of 500,000 Egyptian pounds;
  • 3% of the total annual revenues;
  • a licence burden annual fee of 1,000 Egyptian pounds plus the inflation rate declared by CBE;
  • annual charges for the equipment of the licensee’s subscribers; and
  • a performance bond of 500,000 Egyptian pounds.

VAS

  • An upfront royalty fee of 3 million Egyptian pounds;
  • 3% of the total annual revenues;
  • a licence renewal fee of 1 million Egyptian pounds; 
  • a licences and liability fee of 20,000 Egyptian pounds; and
  • a cash deposit guarantee of 500,000 Egyptian pounds.

VSAT

  • No one-time licensing fee;
  • 3% of the total annual revenues;
  • frequency charges to be determined on a case by case basis;
  • a licence burden annual fee of 1,000 Egyptian pounds plus the inflation rate declared by CBE; and
  • a performance bond of 100,000 Egyptian pounds.

 

Flexibility in spectrum use

Do spectrum licences generally specify the permitted use or is permitted use (fully or partly) unrestricted? Is licensed spectrum tradable or assignable?

All spectrum licences generally specify the permitted use and are not tradable or assignable, fully or partly, by virtue of the Telecom Law unless a prior approval is obtained from the NTRA. In addition, all licence agreements include a change of control restriction, so that the licensee may not even merge with any third party unless prior written approval is obtained from the NTRA.

Ex-ante regulatory obligations

Which communications markets and segments are subject to ex-ante regulation? What remedies may be imposed?

All licences are required, by virtue of the Telecoms Law, to include a number of ex-ante provisions with respect to transparency, price control, cost accounting, accounting separation, access to and use of specific network facilities and non-discrimination.

For example, the NTRA has the right to review any audited financial statement including, inter alia, appointing an auditor other than the licensee’s auditor to review the said financial statement. Furthermore, each licensee is required to obtain an approval from the NTRA before applying tariffs or changing them.

 

Structural or functional separation

Is there a legal basis for requiring structural or functional separation between an operator’s network and service activities? Has structural or functional separation been introduced or is it being contemplated?

According to the Telecoms Law, all licensed operators are required to not support one service in favour of another service. Furthermore, all licensed operators are required to comply with the ITU’s recommendations and international standards. That being said, if for any reason a structural or functional separation is required as per the NTRA’s instructions, the ITU’s recommendation or international standards, then the relevant operator should comply with this requirement.

The first time the NTRA introduced structural or functional separation was for Telecom Egypt to ensure its non-discriminatory behaviour.

 

Universal service obligations and financing

Outline any universal service obligations. How is provision of these services financed?

According to the Telecoms Law, provision of any telecom service must be based on four principles, one of which is the availability of the universal service.

The NTRA is required by the Telecoms Law to transfer its budget’s surplus, except for the amount allocated to the state by the Cabinet of Ministers, to the Universal Service Fund on an annual basis. Any amounts to be transferred to the Universal Service Fund must be utilised on, inter alia, infrastructure projects required for the universal service, reallocation for the spectrum, indemnifying telecom services operators and providers for the price difference between the approved economical price for the services and that which may be determined in favour of the telecom consumers.

Number allocation and portability

Describe the number allocation scheme and number portability regime in your jurisdiction.

There is a specific number allocation plan adopted by the NTRA, which is updated from time to time depending on the increase of telecom service subscribers in Egypt, whereby each operator has a dedicated first 2–3 digits. There are also dedicated numbers for emergency services (eg, ambulance, police, firefighting department).

There is also a mobile number portability regulation adopted by the NTRA whereby mobile subscribers may freely shift between operators without losing their numbers. This regulation includes a number of mandatory terms and conditions applied to both operators and subscribers.

 

Customer terms and conditions

Are customer terms and conditions in the communications sector subject to specific rules?

Yes, all telecom services providers are required to have written contracts with their customers in Egypt. These written contracts are required to follow the form approved by the NTRA and covering, inter alia:

  • type of services that are subject to the customer agreement;
  • confidentiality requirement for the customers’ data and communications;
  • terms of payments including interest, administrative fees, tax and any other burdens;
  • duration and its renewal;
  • rights in case of default or termination; and 
  • the agreement is personal and may not be assigned to any third party without the approval of the licensed telecoms provider.

 

Any violation to the requirements above will result in a penalty from the NTRA as per the Penalties Regulation. For example, in 2016, the NTRA imposed a penalty of 250,000 Egyptian pounds to Etisalat Misr for not complying with this mandatory requirement.

Net neutrality

Are there limits on an internet service provider’s freedom to control or prioritise the type or source of data that it delivers? Are there any other specific regulations or guidelines on net neutrality?

Provision of telecom services in Egypt must always be based on transparency and, therefore, internet services providers may not control or prioritise the type or source of data they deliver.

The Administrative Courts rendered a judgment ordering the NTRA to block pornographic content; however, the NTRA challenged this judgment on the basis that the Telecoms Law does not grant this power to the NTRA.

However, the Cybercrime Law, which was issued in 2018, allows the competent authorities in Egypt to block any website that is broadcast from Egypt or abroad if that website contains any statements, digits, images, videos or any other advertising material that is deemed a crime under the Cybercrime Law. This blockage is subject to judicial review within 24 hours.

Platform regulation

Is there specific legislation or regulation in place, and have there been any enforcement initiatives relating to digital platforms?

Digital platforms are mainly regulated by the following:

  • the Telecoms Law;
  • Law (180/2018) regarding press, media and the Supreme Council of Media (SCoM) Regulation (the Media Law) and its Executive Regulation; and
  • the SCoM Decree (26/2020), issuing the SCoM Licensing Regulation (the Media Licensing Regulation).

 

Digital platforms may not be created unless a licence is obtained from the SCoM and that licence also requires approval from the NTRA.

According to the Media Licensing Regulation, companies carrying out any business activity related to creating digital or satellite platforms must be owned by the state with a minimum authorised capital of 50 million Egyptian pounds.

Next-Generation-Access (NGA) networks

Are there specific regulatory obligations applicable to NGA networks? Is there a government financial scheme to promote basic broadband or NGA broadband penetration?

There is no specific well-developed regulation yet applicable to NGA networks. However, our law firm is proud of obtaining the first ever authorisation from NTRA for using WAN/MPLS in Egypt.

The main general regulatory requirement that is currently adopted by the NTRA is to have NGA networks implemented by a licensed provider of Class A services.

 

Data protection

Is there a specific data protection regime applicable to the communications sector?

There is not yet a personal data protection law in Egypt. However, on 24 February 2020, the Egyptian House of Representatives approved Egypt’s first Personal Data Protection Law (the Data Protection Law). This law is now subject to issuance by the Egyptian President, unless he has any concerns related to it, which is very unlikely.

The approved Data Protection Law prohibits any act of transfer, storage or sharing of personal data that was collected or prepared for processing, to any foreign state unless the following two main conditions are satisfied:

  • application of a protection level that is not less than the one adopted by the draft Data Protection Law; and
  • a licence has been obtained from the Personal Data Protection Centre.

 

The Executive Regulations to be issued for the approved Data Protection Law shall specify the policies, criteria, requirements and rules that shall be met for the transfer, storage, sharing, processing and protection of personal data across borders.

The licensing process is currently unclear; however, in our opinion, this process will depend on a number of factors including, inter alia, the country to which the personal data is transferred, national security concerns and whether or not the country allows the transferring of personal data to Egypt.

Cybersecurity

Is there specific legislation or regulation in place concerning cybersecurity or network security in your jurisdiction?

Yes, the Cybercrime Law concerns any person providing, directly or indirectly, users with any information technology and telecom service including, inter alia, processing or data storage. These providers are required to retain and store users’ data continuously for at least 180 days, including identification, content of the services’ system, communication traffic, terminals and any other data required by the NTRA.

Big data

Is there specific legislation or regulation in place, and have there been any enforcement initiatives in your jurisdiction, addressing the legal challenges raised by big data?

Unfortunately, there is no special regulation yet for big data. However, it is within the NTRA’s ongoing strategy to regulate it.

Data localisation

Are there any laws or regulations that require data to be stored locally in the jurisdiction?

The Consumer Protection Law (181/2018) and its Executive Regulation require all providers of services and products in Egypt, except for the entities that are subject to the supervision of the Central Bank of Egypt (CBE) and the Egyptian Supervisory Authority, to have all advertising, data, information, documents, invoices, receipts, contracts including e-documents with the consumer to be in Arabic or in a bilingual or multilineage form, providing that the Arabic language must be one of these languages.

Key trends and expected changes

Summarise the key emerging trends and hot topics in communications regulation in your jurisdiction.

No one can deny the rapid international transmission into the fintech space. The banking sector in Egypt, being a country that witnessed two revolutions in 2011 and 2013, was definitely affected by such rapid transmission as well. This was more than enough for the Egyptian government, upon a request by the CBE, to propose a new entire draft for the Banking Law. This new draft Banking Law was prepared based on, inter alia, several advices rendered by international consultancy firms, a comparative study for other countries’ laws, international standards, Basel Framework, recommendations of the Organization for Economic Co-operation and Development (OECD), the World Bank Group and the IMF as well as the recommendations made by the banks that are registered with the CBE.

As per the Egyptian Constitution, the new draft Banking Law was submitted to the Egyptian House of Representatives for review and approval. After an almost five-month review, the Egyptian House of Representatives introduced a number of amendments to the New Draft Banking Law that was approved in principle by the Egyptian House of Representatives on 5 May 2020.

No one is now allowed under the new draft Banking Law to carry out any activity of operating payment system or providing payment system unless a prior licence is obtained by the CBE. This new restriction is applied to all persons, whether natural or juristic persons, carrying out such activity inside Egypt or providing such services abroad to any residents in Egypt except for stock exchanges, futures exchanges, securities settlement systems, licensed central clearing, depository and registry systems, custodian banks, and internal systems of the Egyptian Ministry of Finance that do not include payment, collection, set off or clearance of payment.

Law stated date

Correct on

Give the date on which the information above is accurate.

15 May 2020