OT emerges as Mideast-African mobile operator
Egypt's Orascom Telecom is emerging as a significant regional player as it buys up mobile phone licenses in Africa, the Middle East and Pakistan, analysts said.
Pioneering in new markets, much as Telefonica has done in Latin America or Hutchison Whampoa in Asia, OT could become an attractive partner or purchase for global players like Vodafone or Vivendi, the firm and analysts said.
"My strategy is simple," Orascom Chairman Naguib Sawiris told AFP. "If someone wants this area (Africa and the Middle East) and you have blocked this area as OT, he has no entry level but through OT."
The 46-year-old entrepreneur is a scion of an Egyptian Coptic Christian business family that owns around 60 percent of Orascom, with most of the rest floated on the Cairo and London stock exchanges.
Analysts with Cairo-based EFG-Hermes and London-based HSBC are bullish on OT's long-term prospects, saying it has positioned itself well to profit from surging growth in mobile phone use in countries lacking fixed line networks.
In a shopping spree that began two years ago, Orascom now has licenses and joint ventures spanning 20 countries and serving 2.1 million subscribers, who have jumped 125 percent in the last year. (OT's portion of subscribers is 780,000).
Orascom, using mainly pre-paid billing and offering good products, knows how to win and keep customers in markets where there are now firms backed by Britain's Vodafone, France Telecom, MTN of South Africa and MSI of Britain, according to EFG Hermes' Nermeen Amin. It is an "aggressive competitor," she said.
OT Holding Company is also more than an investment firm, as it aims to control the operators in which it has a stake and to increase their value. Sawiris said he plans to connect the firm's various networks to cut costs.
Tim Kelly, who follows developments worldwide for the International Telecommunication Union in Geneva, agrees that Orascom "is emerging as an important regional player."
In the past month, Orascom consolidated its position in cellular operators in Egypt, Jordan, and Pakistan — its biggest revenue earners — by buying out Motorola's stakes. And through its partnership with SyriaTel, Orascom won a license in Syria.
But its venture with United Networks Ltd. dropped out of a fierce auction in populous, oil-rich Nigeria when the license price hit $285 million.
Orascom got its start in 1998 when it teamed up with France Telecom and Motorola to launch Egypt's first private mobile phone network, MobiNil.
After MobiNil was a "big success, I decided the timing was correct to go and conquer this part of the world before the multinationals and international operators think of doing the same," Sawiris said.
In early 1999, OT bought a majority stake in Jordan's GSM operator Fastlink, then acquired GSM licenses in Congo-Brazzaville and Chad.
In February 2000, OT acquired 80 percent of Geneva-based Telecel International, which now controls cellular licenses in more than a dozen sub-Saharan countries like Ivory Coast, Zimbabwe, Zambia and Togo.
Around a month later it bought a controlling interest in Pakistan's Mobilink and has since consolidated its position in a company it fully expects to reap the fruits of a fast growing market.
To help fuel its expansion drive, OT raised $320 million in an oversubscribed IPO in London and Cairo last July and raised another $200 million from a syndicated loan arranged with Citibank and Chase.
In a report last week on the first nine months of 2000, OT recorded revenues of 1.497 billion Egyptian pounds (3.85 pounds to a dollar), up 42 percent over December 31, 1999, and EBITDA value of 550 million pounds, up 66.4 percent.
HSBC's Manal Ezzedine, contacted in London, said the results were lower than expected and pointed out net losses of 123.6 million pounds.
But both HSBC and EFG Hermes analysts said the performance was mainly to do with Orascom's aggressive expansion strategy; with losses coming from African start-ups, foreign exchange and intense marketing and price-cutting to win the Jordan market.
Both said the results did not undermine their view that the company was fundamentally strong and debt levels are comfortable. — (AFP, Cairo)
By Lachlan Carmichael
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)