More Egyptian Fallout
Vodafone’s 22% local partner the fixed line incumbent, Telecom
In a normal auction scenario, the incumbents watch nervously wanting the price to go as high as possible to weaken the competition and improve their asset value. In this case, Vodafone and Mobinil must have been praying for an early end to the auction. For me, this means that the side effect of betting big is that Etisalat will probably get to build its’ 3G network first and have a go at churning all those heavy users wanting advanced services. Either someone really smart designed the auction or the Egyptian government got lucky. I wouldn’t be surprised at all if this man had a hand in it. I actually quite enjoy studying auction theory and practice and have been thinking overnight what the Etisalat strategy was.
I came up that Etisalat was trying to deter future bidders at future auctions. The most basic rule of auction theory is that in order to be efficient they have to attract a decent number of bidders. Etisalat is signaling to the rest of the wireless asset buyers world that they will outbid anyone, witness the
One final point on the Egyptian auction before I bid goodnight is the report in today’s press that Telenor losing the auction is actually beneficial for Telenor shareholders. I think this fundamentally misses the point – what is Telenor doing bidding on Middle Eastern Assets in the first place? After their recent purchase of a licence in