Telecom Egypt is 80 per cent state-owned and has seen declining numbers on its fixed-line subscriptions, despite being the only provider in the country.
The announcement was made to the Egyptian Stock Exchange and is the first serious ICT or telecommunications development since the military coup that took place more than one month ago.
Fixed-line subscribers on Telecom Egypt fell from 7.9 million in the first quarter of 2012 to 7.2 million in the same quarter in 2013 and the agreement will not only lead to Telecom Egypt being able to offer mobile services, but also allow Etisalat to provide fixed-line.
It is understood market rivals Vodafone Egypt and Mobinil will also be able to provide the landline services.
Etisalat has a 27 per cent market share in Egypt.