Heitkenoffel plans to export fibre optics manufactured at its plant in the city of Badr starting from the second half of 2019. The company aims to export to Nile Basin and Common Market for Eastern and Southern Africa (COMESA) countries, according to company chairperson Mohamed Nofal.
What are the most prominent investment opportunities you see in the sector now?
The Ministry of Communication and Information Technology has an initiative to expand the availability of ADSL broadband, which played a great role in stimulating the sector, especially as the plan aims to connect all government facilities via broadband services to offer sophisticated services to citizens in the sectors of health and education.
The plan required a network of modern fibre optic cables to improve the sector’s infrastructure. This development will become the backbone of 4G services, which were launched a few months ago, along with the 5G services that will be launched in the future.
This trend contributed to creating new investment opportunities in the infrastructure sector and helped us inject new investments in the sector, both in manufacturing fibre optics and their accessories.
What are the challenges facing you in the market?
Bureaucracy is among the biggest challenges we face. Some service sectors are suffering from bureaucracy, which impacts us negatively.
But last year, the sector saw an unprecedented change. The performance of many government sectors, especially those related to investment and industrial development, improved.
Did the investment climate improve in Egypt?
The investment climate saw much improvement recently. The simplest example is that we signed a partnership agreement with a foreign company to manufacture fibre optics in Egypt and we will, in that way, absorb new foreign direct investments. This is evidence of foreign investor confidence in Egypt and proves the improvement of the investment climate.
Hang Tung Resources is the second largest company in China in the field of manufacturing fibre optics and the fourth biggest company globally in terms of market share. Its decision to turn to Egypt reflects the strength and the importance of the Egyptian market and the investment climate here.
The company also has a plan to cooperate with us to raise the local components ratio to 80% or more, supported by manufacturing the silicon-based core parts locally within two years at most.
What is the company’s strategy in the coming period?
We aim to improve the research department of the company in cooperation with centres of the Egyptian Ministry of Trade and Industry, such as the Industry Development Authority, to gradually increase the local component ratio.
We also aim to create an integrated community between labour and technicians involved in the manufacturing of fibre optics. This plan was initiated four years ago, but it will grow and expand faster to benefit from the presence of the modern fibre optics factory and a strong Chinese partner.
Is there a problem with finding trained labour for the industry?
There is definitely a shortage in labour. We are now working to improve expertise in the field of design and installation of fibre optics and train labour on manufacturing stages.
Do you believe the communications infrastructure is good enough?
The current infrastructure requires further modernisation and development. The available infrastructure is 60% sufficient. Telecom Egypt is still working to improve the sector in Egypt.
How did the development of infrastructure help the company’s growth?
Recently, we have experienced annual growth of 25-30%, supported by new projects to improve the communications infrastructure in cooperation with Telecom Egypt.
What about manufacturing in Egypt?
We have an operational factory in the city of Sixth of October since 1994, which produces fibre optics and copper accessories, such as conductors and network distributors. This factory offers its products to many companies, including competitors. We are one of the largest suppliers of these accessories in Egypt.
Our factory in Badr is specialised in fibre optics. It is the only factory in Egypt in that field. We operate it in partnership with one of the biggest manufacturers of fibre optics in the world.
We believe that our factory will play a big role in developing Egypt’s infrastructure as technology improves and access to internet become a necessity. Reports show that by 2022, every person will have seven devices linked to the internet, which would then require a strong infrastructure.
What is the factory’s investment value?
Total investments amount to EGP 250-300m. It is built on 27,000 sqm. The factory is being implemented over three phases, one of them is to locally manufacture the fibre optics core.
What are your plans to export fibre optics?
We plan to cover the Egyptian market’s needs of fibre optics in the first year of production. In the second half of 2019, we will begin exporting to Africa, especially the Nile Basin countries and COMESA member states.
What is the magnitude of the local market’s needs of fibre optics?
The market needs about 50,000 km of fibre optics. We had two production lines in China’s Hang Tung factory that produced 20,000 km of fibre optics per year. Now, one production line has been moved to the new factory in Badr, which is expected to output 9,000 km per year. The production capacity is expected to reach 22,000 km by the second half of 2019.
What is your targeted business volume growth?
We aim to increase our business size by 25% per year. This can be achieved when we rely on trained Egyptian labour. We also have a modern centre to test fibre optics, which is the largest of its kind in the Middle East and will help us expand in Africa.
Who are the most prominent partners for you in Egypt?
We have strong partnerships with many major companies, including Telecom Egypt, Vodafone, Orange, and Etisalat, along with security agencies and oil companies. Moreover, we are offering our services to the New Administrative Capital. Our team will implement installation procedures in cooperation with Telecom Egypt.
What is your plan to expand your training centre?
We offer training for fresh university graduates and undergraduates for free in cooperation with the American Fiber Optic Association (FOA), which is the largest training company for engineers and technicians in the world.