If the unnamed Algerian officials quoted in recent press reports are to be believed, the future of Orascom Telecom in Algeria is in serious trouble.
As going gets tough, Sawiris gets going
If the unnamed Algerian officials quoted in recent press reports are to be believed, the future of Orascom Telecom in Algeria is in serious trouble. The Egyptian mobile company and its way of doing business is no longer welcome there, the officials told Reuters. The remarks seemed particularly pointed: just days earlier, the Orascom chairman, Naguib Sawiris, said he would stop doing business in Algeria if told he was not welcome.
Diplomatic relations between Algeria and Egypt are at a low after a bitter and sometimes violent series of confrontations over football matches between the two North African powerhouses. Those confrontations were the last thing that Orascom, which was already locked in a US$600 million tax disagreement with the Algerian government, needed. It is important not to underestimate the fighting spirit of Mr Sawiris, or his willingness to leave a difficult market for the right price. Under his leadership the company has entered and left - and sometimes re-entered - some of the world's trickiest countries.
Mr Sawiris is unlikely to be spooked by the political uncertainty in Algeria. Alongside fighting intense regulatory battles in Italy and Canada, his companies happily do business in North Korea and Zimbabwe. Between the four countries, it is unlikely that there is anything original that the Algerian government could throw at him. But a pragmatist knows when it is time to seek greener pastures, and if told to leave Algeria, Mr Sawiris will likely comply. That will mean Orascom loses its most profitable operation, which generates 41 per cent of revenues and 50 per cent of total earnings for the company.
With its Egyptian network, Mobinil, also locked in a tricky ownership dispute with its joint-venture partner, France Telecom, Orascom now seems to be standing on extremely shaky ground. Mr Sawiris has seen the company through many tough times, but the coming months will be decisive. @Email:firstname.lastname@example.org