Market Report: Sudden Increase in Recharge Card Prices Shocks Masses
By: Nada Darwish
Follow @nadadarwish_
On September 28, the Egyptian National Telecommunications Regulatory Authority (NTRA) announced a 36 percent increase in prices of mobile recharge cards for all telecommunication companies, including WE, which launched less than a month ago.
Hours following the decision, social media activists called for boycotting the companies in an attempt to reverse the decision.
They said the price hike raises questions as to whether the decision is related to the launch of WE, owned by Egypt’s leading telecommunications company El Masriya Lel Etisalat (Telecom Egypt), with its competitive prices and high market shares.
Online newspaper El Fagr reported that WE witnessed a dramatic increase in its fair value of shares in the stock market by 125 percent, shooting from EGP 8.34 per share to EGP 18.80 per share.
It also reported that Telecom Egypt has benefited from the flotation of the pound since one third of its revenues are denominated in US dollars.
However, a spokesperson from the NTRA told The Caravan that the announcement was based on the request of mobile companies seeking modification in the prices of recharge cards.
The companies say that the burdens are increasing as well as their financial and operational costs.
As a result, their request for hiking the prices was approved.
Eventually, the NTRA adjusted the prices of the recharge cards.
They also added that the increase is a tax for added value and operating expenses.
Professor of Economics Adel Beshai told The Caravan that more taxes have to be implemented in order to help the economy flourish.
He also added that the launching of WE may result in a positive impact in the overall telecommunications industry.
“There is a very competitive vibe happening between the four companies right now. The three current companies will be obligated to lower their prices in order not to have a very distinctive market share compared to WE,” he said.
Competition, he said, is healthy to the economy and allows consumers the freedom to make choices between different providers. This freedom of choice forces competitors to become not only more efficient, but also more consumer-friendly.
“Economically speaking, having one company can monopolize [the industry], having two companies can disagree with each other, while having four companies, there will be some kind of competition,” he said.
