Telecommunications sector support

The project will have two types of outputs: infrastructure development, and policy/institutional reform. Infrastructure development will include (1) a mix of digital switching systems and associated outside plant networks (multiple pair cables, conduit and duct systems, and termination cabinets); (2) replacement of obsolete crossbar switching systems; and (3) hardware, software, and auxiliary systems for a new Network Operations Center to provide ARENTO with the capability to make network management decisions on a real-time basis. ARENTO has identified a minimum of 20 digital switches with a total capacity of 466,000 telephone lines to be added or replaced during the project; its long-term goal is to bring Egypt"s telephone density up to 7 per 100 persons by the year 2000. In addition to equipment costs, the project will fund TA and consulting services and in-country and participant training; operation and maintenance (O&M) training will be likely be provided by U.S. equipment suppliers. The project"s policy/institutional reform agenda will emerge from sector assessments and studies already underway; a time-sequenced reform package will be detailed in a Memorandum of Understanding, which will incorporate the conditions for future funding tranches (the initial tranche of $30 million is not conditioned). The reforms will include, inter alia, the modernization of ARENTO"s operating procedures and management policies in regard to autonomy of operation, retention of net income, employee retention, and staff development; pricing strategies to ensure an adequate return on investment; and generation of sufficient cash to cover O&M costs. The project will provide TA in the implementation of reforms as needed.