Vodafone Egypt facing foreign currency shortages
“The company has asked some suppliers to accept payment in Egyptian pounds,” Dowidar said.
Dowidar said that the currency constraints may not necessarily affect the earnings of the company this year, but are likely to affect its long-term growth if the problem persists.
“So far we have prioritised things like roaming, SIM cards and top-up cards, but that’s at the expense of network equipment and infrastructure,” he told Reuters, adding that revenue sharing on international roaming deals was also problematic.
“We have orders that we’re not able to fulfill because we can’t ensure that we have the currency to pay for it,” he said.
Vodafone has been trying to improve its network and expansion plans for the past three months, specifically upgrading base stations to high-speed, third-generation networks.
Dowidar added that Vodafone’s operating costs had increased due to government plans to reduce fuel subsidies.
“It’s not the running costs that are the main problem for the company right now, it’s more the capital expenditure, equipment and investments in the network,” he explained.
Egypt’s foreign currency reserves have suffered greatly following the 25 January Revolution, leaving many companies unable to secure currency other than on the black market at inflated rates.
Egypt’s foreign currency reserves currently stand at $13.5bn compared with $36bn on the eve of the revolution.
The Egyptian pound has plummeted against the US dollar at around EGP 6.9 to the dollar, while it recorded EGP 7.7 and EGP 7.85 on the black market.
“This isn’t something that will affect us today or in the coming financial year in terms of business results, but if this currency situation continues for a very long time it will end up affecting long-term growth,” Dowidar said.
Vodafone Egypt is 55% owned by UK-based Vodafone and 45% by state-owned landline Telecom Egypt.