This report analyzes the opportunity for Menatel, an Egyptian telecommunications company, to invest in a public payphone project in Libya. It provides an overview of Menatel, analyzes the external and internal factors using EFAS and IFAS matrices. The TOWS matrix then evaluates strengths, weaknesses, opportunities and threats. Libya is deemed a potential market based on the analysis. Overall, the report finds the investment opportunity in Libya aligns with Menatel's strategy and recommends further evaluation.

1. Rennes International School of Business
ESC RENNES
Executive Master of Business Administration
EMBA
COHORT 1 (2003 - 2004)
International Business
Conducted by:
Jamie SMITH
The opportunity to invest in public payphone project
With (GPTC) Libya
By
Magdy A. Sattar
February, 2004
Cairo, Egypt

2. EXECUTEVE SUMMARY .................................................................................................................. II
1- REPORT OBJECTIVE. ............................................................................................................... 1
2- MENATEL PROFILE.................................................................................................................. 1
3- CURRENT SITUATION ANALYSIS (CSA). ............................................................................ 2
4- MENATEL EXTERNAL FACTOR ANALYSIS SUMMARY (EFAS) .................................. 5
5- MENATEL INTERNAL FACTOR ANALYSIS SUMMERY (IFAS) ..................................... 6
6- MENATEL TOWS MATRIX ...................................................................................................... 7
7- PUBLIC PAYPHONE INVESTMENT IN LIBYA ................................................................... 8
8- CONCLUSION ........................................................................................................................... 12
9- RECOMMENDATION .............................................................................................................. 13
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3. EXECUTEVE SUMMARY
This report is to cover the opportunity of Menatel to invest in public payphones
project with (GPTC) Libya, demonstrating my understanding of the principles and
techniques of international business. I will start by a short presentation about Menatel
profile, environment, objectives, and goals. Analyzing the available data using the
EFAS, IFAS, and TOWS matrix over Menatel to identify the opportunities, threats,
strengths, and weakness, then breaking down the findings to show that Menatel
strengths can cop-up with international development strategy. Choosing Libya to be
analyzed using EFAS, and TOWS matrix to answer Yes/No, Whether Libya is the
right foreign market. Driven by the analysis results a final conclusion is obtained and
a recommendation plan.
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4. 1- Report Objective.
The purpose of this report is to allow me to demonstrate my understanding of the
principles and techniques covered during the international business course. I will
submit a business report that will address a proposed entry strategy for Libya,
conducting both IFAS & EFAS over Menatel, and evaluating the proposed entry
strategy. By using Menatel internal data, EIU, and CIA, and Coface web site as
sources for the data.
2- Menatel profile
Late in 1998 Menatel was born as a joint stock company, under investment low
number 8/1997 registered in 1998 under number 314030. Menatel is granted a ten
years; renewable license, to install, operate, and manage a telecommunication
network of at least 30,000 public payphone. Egyptian shares are 53 % and foreign
shares are 47 %. By the end of 2003 Menatel has been operating a payphone network
with near to 30,000 payphones in operation, and work force of more than 400
employees. Thanks to our customers love, appreciation, and trust Menatel’s two
colors (green and yellow) are now a trend, they can be seen every where, not only
Menatel payphones but also kiosks, bill-boards or sometimes even buildings are
painted in those two colors. This proves the fact that Menatel has succeeded to
become an integral part of people’s daily life in Egypt.
2.1 Menatel Vision
To be the leaders in the field of telecommunication services, as well as the leader in
creating a national base of accumulated expertise of high Egyptian telecom engineers.
2.2 Menatel Goals
Exceptional Customer Satisfaction.
Inspired, innovative and empowered Employees.
Depending on local sourcing whenever possible.
Superior Financial Results.
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5. 2.3 Menatel Values
Customer First.
Integrity in All we do.
Excellence through Total Quality.
Respect for others.
Respect for our environment.
Growth through change.
3- Current Situation Analysis (CSA).
3.1 Market Environment
Egyptian telecommunication market is a promising market, despite of Telecom Egypt
(TE) dominance over the market, the escalating developments of the market toward
liberalization, the issuing of telecommunication law in February 2003, and the role of
Telecommunications Regularity Authority (TRA) will make TE a Dinosaur no more.
The fixed lines telecom market is getting more competitive, as TE is pushing toward
increasing the penetration rate, by offering lines at 50 % discount, the ambitious
universal plan for TE to operate 40,000 payphone all over Egypt, the newly entranced
of the prepaid calling scratch card (two new licenses) in addition to TE Marhaba card,
and Egypt Telecard.
The second payphone license, our direct competitor (with two brands, Nile Telecom,
and Rengo), is in a very tough situation, with lots of debts to TE that might drive them
to go bankruptcy, or to turn their debt into equity for TE. In both cases we are
anticipating to seize the opportunity of the gap of their absence, and the new
competition directly with TE (unfair competition) or to compete with a new comer
(not likely to happen due to the current political and economical situation).
We strongly believe that the TRA will not allow us to be the sole player in the market.
Thus if our direct competitor went out of market or bankrupted, they would issue a
call for new payphone license or they will allow TE to go into this market to fill the
gap, and avoid Menatel monopoly.
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6. The indirect competition by the two GSM companies (Vodafone and Mobinil),
through their prepaid and postpaid lines, we are monitoring the two big elephant
movements towards increasing the capacity of their network and subscribers.
3.2 Market Players
Telecom Egypt (TE)
Telecom Egypt (TE) operates more than 7 million lines in Egypt, some 80% lines
installed are residential, 17% business and the remaining 3% government.
The Egyptian fixed lines market is under-penetrated; at the end of 2002 wire line
penetration totaled 12%, representing 7.75 million access lines in service. Expected
wire line penetration in the end of 2007 is 19.6%, representing 14-million access line
in service.
Wire line 1998A 1999A 2000A 2001A 2002A 2003A 2004F 2005F 2006F 2007F
penetration
Year to June
Population (m) 62.7 64.0 65.0 66.0 67.00 67.8 68.7 69.5 70.2 71.5
Access line 3,972 4,686 5,530 6,530 7.75 8,830 10,130 11,430 12,730 14,00
installed (000)
Growth (%) - 18 18 18 19 16 15 13 11 11
Additions (000) - 714 844 1,000 1,220 1,200 1,300 1,300 1,300 1,300
Penetration (%) 6.3 7.3 8.5 9.9 12 13 14.7 16.5 18.1 19.6
A= actual, F = forecasted
Prepaid Calling scratch Card (PCC).
Two active players in the market, one is a private owned company called Egypt
Telecard, and the other one is Marhaba service owned and managed by TE. In
addition to the 2 million card capacity of the two TE (IN) Intelligent Network
platforms in operation today, TE has ambitious plans to upgrade there system capacity
(2million card “IN” platform contracted) expected to be in operation by June 2004.
Egypt Telecard also made use of the long time span of the Scratch Card License
bidding to upgrade their system capacity which resulted in enhancing their quality of
service, and expanding their distribution channels.
The marketing intelligence information we managed to gather was as follows:
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7. Egypt Telecard and Marhaba achieved sales of 22 million cards during the period
from Jan. 2002 till Dec. 2002, which is equal to approx. 250 millions LE. Taking that
the minimum face value of “Marhaba” is LE. 15 and it has gone out of stock several
times.
Public Payphones.
Menatel is maintaining the leader position by far; we are in a dominant company
position, far ahead our direct competitors Nile & TE. According to ministry of
communication and information technology (MCIT) report of February 2004 the
situation is as follow:
Market coverage in Dec. 20021
Company Number of Payphones
Menatel 28897
Nile & Ringo 14000
TE 4593
Market coverage in Dec. 20032
Company Number of Payphones
Menatel 29878
Nile & Ringo 14000
TE 4532
The above shows that we are still improving our position, while Nile is blocked. As
for TE, their plan is to upgrade and replace their old payphones, with new ones using
Smart Cards, and to go public; as we know from our sources they started to request
digging permits in Cairo. We anticipate an aggressive competition from TE.
1
Ministry of Communication & Information Technology (MCIT) report Dec. 2002.
2
MCIT report Dec. 2003.
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8. 4- Menatel External Factor Analysis Summary (EFAS)
Opportunities
Weight Score Weighted Score Comment
Telecom Market Need to be part of
O1 0.150 4 0.60
Growth this growth
Prepare for now
End of TE
O2 0.050 3 0.15 opportunities (2nd.
monopoly 2005
Operator)
Increased tariff of More customers
O3 0.065 3 0.20
TE prefer prepaid
New monetary Low interest rate
O4 0.030 3 0.09
policy & investment cost
Lobby to fight
New Telecom law
illegal competition
O5 & empowering 0.130 3 0.39
& balance TE
TRA
power
Nile Telecom
Prepare to take
O6 might be out of 0.060 4 0.24
their market share
market
Neighbor
Exporting
O7 Developed 0.024 3 0.072
Experience
country
Threats
Scratch market Due to new
T1 0.090 3 0.27
growth licenses
Economy Likely to continue
T2 0.075 3 0.225
slowdown during 2003
Floating of Increased cards &
T3 0.075 3 0.225
Egyptian pound spare parts' cost.
Lobby to solve
TE power still
T4 0.100 3 0.30 disputes to our
high
favor.
Nile Telecom New payphone
T5 might go 0.050 3 0.15 license (Unknown
bankruptcy competitor)
Increased number Illegal competition
T6 0.075 3 0.225
of substitutes of street mobile
Middle East Iraqi war and
T7 0.026 2 0.052
political instability Palestine conflict.
Total 1.00 3.189
We believe that our performance is average we need to move faster to attack current
opportunities.
Also the situation internationally is not good, we need to have deep analysis over the
neighborhood countries (Sudan, Libya, Jordan), in order to find a way to sell our
expertise.
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9. 5- Menatel Internal Factor Analysis Summery (IFAS)
Strengths
Weight Score Weighted Score Comment
Learn from related
Strong management
S1 0.075 4 0.30 experiences &
with FT know-how.
benchmarking
Established
Considered one of the
S2 distribution 0.050 4 0.20
best in Egypt
network.
Market leader & Dominant company
S3 0.075 3 0.225
strong brand name position.
Strong financial Cash method, no credit
S4 0.080 5 0.40
position. policy.
High quality of Need to be maintained,
S5 0.045 4 0.18
service & coverage competitive advantage.
Utilized functional &
S6 Slim organization 0.035 3 0.105
matrix organization.
Deep knowledge of Ability to meet new
S7 Scratch business 0.060 4 0.24 challenges in the
economics market.
Highly trained & Ability to be export
S8 0.080 5 0.40
skilled employees expertise
Weaknesses
Stagnant
New Dept's needed,
W1 organization, no 0.090 2 0.18
start with HR.
clear career path.
Customer service
W2 function not 0.060 2 0.12 Call center is needed
utilized
Marketing less
Market watch, market
W3 structured & 0.100 3 0.30
analysis, & PR
unclear strategy
FT is affected by
W4 0.060 3 0.18 Seek hedging tools.
exchange rate.
Spare parts
W5 0.060 3 0.18 Strategic stock needed
shortage
Distributors’ Avoid out of stock
W6 0.055 3 0.165
coordination. situations
Maintenance
Revisit cars' policy &
W7 vehicles operating 0.025 3 0.075
control procedures
cost
Premises needs Limited org. growth
W8 0.050 3 0.15
expansion potentials
Total 1.00 3.40
We believe that we are doing slightly more than average and we can be better if we
work on our weakness effectively.
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10. 6- Menatel TOWS Matrix
STRENGTHS WEAKNESSES
Strong management with FT Stagnant Organization, Unclear
know-how. Career path.
Market Leader & Strong Marketing less structured &
Brand Name. Unclear Strategy.
Strong financial position.
Highly trained & skilled
employees
OPPORTUNITIES
1- New Strategic Plan aiming to
Telecom Market Growth explore the expected opportunities 1-Revisit Org. Chart
in Telecom market.
New Telecom Law & 2-Benefit from our cash position to
2-Revisit marketing functions.
Empowering TRA finance our development plans
Neighbor Developed 3-Second Operator as strategic 3-Revisit Customer Service &
country Target after 2005 Card Distribution.
4-Analys the possibility of
exporting expertise
THREATS
New strategy to be adapted under
Economy slow down. consideration:
1-Side effects of economic
1-Slow growth with close
Floating of Egyptian Pound. recession & decreased buying
monitoring to the market.
power.
2-Advanced hedging & financing 2-Staff frustration and decrease
Increasing number of substitutes techniques. of productivity and efficiency
3-Consumers attracted by lower
3-Advanced marketing & Sales
priced substitutes, we might face
Techniques.
price wars.
Following the above analysis we recommend the following strategies:
First mover into the market strategy, seizing new opportunities.
High entry barrier walls strategy.
High quality of service standard toward customers.
Highly competitive strategy (not cooperative with competition).
Analysis to neighbor countries business environment is to be
prepared annually.
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11. Through which an analysis of the opportunity to invest in public payphone project
with General Post and Telecommunications Company (GPTC), the sole provider of
basic fixed telephone services in Libya.
7- Public Payphone Investment in LIBYA
We planed to perform this study through three steps:
 First; data analysis provided by three main sources
 Economist Intelligence Unit (EIU).
 The world fact book CIA.
 COFACE.
 Second; a field visit & observation (inspection visit)
 Third; interview with industry experts in (GPTC) Libya
As planed we prepare the data required for analysis in LIBYA as follows:
 Macro economic data with EFAS.
 Micro economic data
 Industry data
 All available data regarding the risk assessment.
 A TOWS matrix to identify the entry strategy for Libya.
7.1 Macro economic data
(USD billions) Source 1999 2000 2001 2002 2003 2004
GDP cofas Na Na Na Na Na Na
EIU 30.5 34.0 27.5 16.5 18.3 Na
Economic or Real GDP growth (%) cofas 0.7 2.3 0.5 -0.2 5.6 1.8
EIU 0.7 2.6 1.1 1.5 2.7 Na
Inflation (%) cofas 2.6 -3 -8.8 -9.8 2.8 2.9
EIU -6.0 -3.0 -8.5 1.1 1.7 Na
Public sector balance (% GDP) cofas 5.5 9.5 -0.3 3.9 14.2 6.5
EIU Na Na Na Na Na Na
Exports cofas 7.2 12.1 9.0 8.3 10.1 8.6
EIU 7.2 14.2 12 11.6 13.9 Na
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12. Imports cofas 4.7 4.1 5.3 7.4 6.3 6.7
EIU 4.3 3.7 3.9 3.6 3.9 Na
Trade balance cofas 2.5 8.0 3.6 0.9 3.8 1.9
EIU Na Na Na Na Na Na
Current account balance (% GDP) cofas 5.4 20.5 8.6 -1.2 10.4 0.6
EIU 2.1 9.3 6.7 6.7 8.7 Na
Foreign debt (% GDP) cofas 5.8 5.3 5.4 5.6 5.6 5.6
EIU 5.1 4.6 4.4 4.4 4.2 Na
Debt service (% GDP) cofas 3.1 7.1 9.0 6.6 8.7 10.3
EIU 3.0 6.1 6.2 6.1 5.3 Na
Currency reserves (import months) cofas 13.3 24.7 23.3 17.4 21.7 20.8
EIU 7.2 12.4 14.8 14.7 22.3 Na
Population (m) cofas Na Na Na Na Na Na
EIU 5.1 5.2 5.3 5.5 5.6 Na
From the above table we can analyze the external factors (EFAS) and obtain the
opportunity and threat of the Libyan business environment, as it shows below.
7.2 Libya EFAS
Opportunities
Weight Score Weighted Score Comment
Telecom Market Need to be part of
O1 0.20 3 0.60
Growth this growth
Young population
concentrated
O2 population 0.10 4 0.40
around the costal
cities
High standard of
O3 Currency reserves 0.20 4 0.80
living
Threats
Dominated by
T1 Economic policy 0.15 2 0.3 hydrocarbons
sector
Exchange-rate
T2 0.10 3 0.3 A tiered system
system
Relation with
T3 0.15 3 0.45 Un predictable
USA & Europe
Middle East Iraqi war and
T7 0.10 3 0.3
political instability Palestine conflict.
Total 1.00 3.15
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13. 7.3 Micro economic data
For transportation Libya has a reliable network of roads, about 25,000 km. Most
major towns and villages are accessible by car. The local currency is Libyan Dinar
(LYD), and the exchange rate LD per USD 1.2 2003.3
Population distribution per city:4
Tripoli 1,104,972
Benghazi 596,972
Misurata 314,304
Marqub 305,873
Tarhuna & Missallata 277,606
Jefara 270,152
Khums 197,117
Zawiya 185,842
Jebel Akhdar 182,271
Gharyan 151,162
7.4 Industry data.
For telecommunication sector of Libya lags behind in telecommunication
development. The domestic telephone system is microwave radio relay, coaxial cable,
cellular, tropospheric scatter, and a domestic satellite system with 14 earth stations,
and here are some figures5:
 State-owned sole provider (GPTC) for fixed telephone line.
 605,000 fixed telephone lines.
 Penetration rate of just 11 %.
 State-owned sole provider (Al Madar) for mobile telecom.
 50,000 mobile lines in 2002.
 Penetration rate of just 1 %.
3
IMF international financial statistics
4
National Authority for Information and Documentation (NAID)
5
Libya country profile (EIU) 2003.
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14. 7.5 Other available data & risk assessment
Security risk, Libya has a fairly low security risk, according to EIU there have been
no reports or announcement from any multinational firm operating in Libya
considering this issue.
Economic policy risk, considerably high, as the Libyan economy is dominated by the
oil sector (41 % of GDP)6, and the policymakers respond to transfer the economy into
a market economy through liberalization and privatization is weak.
Political risk, considerably high, as Libya is theoretically governed by the people
through local council The General People’s Congress (GPC), but practically it’s
governed by the Colonel, (a one- man- democracy system).
Economic risk, considerably low, as Libya high earning from the oil sector, the high
level of currency reserves, the moderate debt level, and the low number of population
provide a high living standards to the Libyans.
Telecommunication Infrastructure risk, considerably high, as the technical capability
and the telecommunication sector management is poor.
Culture risk, considerably low, though the Libyan community is characterized by
being a tribal and closed community, but the language, the special close relation, and
the neighborhood characteristics stands as advantages to the investments their.
Country rating risk, reference to coface standards and methodology of country rating
risk, Libya have unsteady political and economic environment. That is rank C.
7.6 TOWS Matrix
We combined Libya EFAS and Menatel IFAS to propose the suitable international
development strategy for interring Libya`s Telecommunication market.
6
EIU 2003
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15. STRENGTHS WEAKNESSES
Strong management with FT Stagnant Organization, Unclear
know-how. Career path.
Market Leader & Strong Marketing less structured &
Brand Name. Unclear Strategy.
Strong financial position.
Highly trained & skilled
employees
OPPORTUNITIES
Telecom Market Growth
Libya Demographical Benefit from our strong
management know-how and the
conditions
highly trained and skilled
Re design organization adapting
employees to implement the
Country revenue & currency strategy.
suitable entry strategy to explore
reserves the expected opportunities in
telecom market.
THREATS
Economic policy
Exchange-rate system Benefit from our strong financial
position and accounting system to It is difficult to generate strategy
Relation with USA & Europe implement a low-cost effective to avoid unsteady
strategy.
8- CONCLUSION
The telecommunication market in Libya is indistinguishable; the unsteady political
and economic environment barred us from clear country business environment
understanding. We see opportunity in the current economic situation by high stander
living conditions, but the unsteady economical policy and the poor exchange-rate
system are threatens to our investment. The good relation and neighborhood
advantages encourage us to enter this market, but the unpredictable political trends
discourage us to do so. Any entry strategy through GPCT, the sole provider to fixed
lines service, by any way benefits us (no competition), but GPCT poor management is
a highly risk. The conclusion is we can not have clear Yes/No decision for entering
Libya telecommunication market; we need further investigation to reduce the risk.
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16. 9- RECOMMENDATION
According to our analysis and this vague picture, we strongly suggest assigning a
project manager to go and visit Libya and meet the General Post and
Telecommunication Company (GPTC) top management with one weak field
inspection visit to come up with the following data to facilitate the process of
evaluating the project in order to give some reliable study help taking the right
decision,
 Data regarding the future plans by GPTC to improve the
Telecommunication sector, expected increase in both Fixed Lines and
GSM phones in the next 5 years.
 Documents regarding the prepared plans to improve the infrastructure
in next 5 years.
 Updated F. Study Prepared by GPTC in order to give some reliable
data regarding the other internal Business Aspects involved in the
project.
 Study prepared by GPTC to evaluate, if exist, the laws organizing the
relation between Scratch Card Businesses and the Public Payphone
Business.
Also to find answers, with the help of GPTC, to the following questions:
 Customer behavior indicators, and does the climate conditions in Libya
affects the use of payphones
 The market players and competitors
 The cost of installation and paying or importing the necessary
equipments
 The custom duties and the taxes regulation
 The monopoly statues and expected end
 Telecommunication and information laws
 The distribution channels conditions and characteristics
 The monitory policy and transfer of profit in hard currency ($)
 Tax privilege for foreign (Egypt) investment
 Deep call analysis per destination, type, price, customer…
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