Orascom's Naquib Sawiris plans of ending his reign at the helm of the telecoms firm.
Orascom founder to yield control
CAIRO // Naguib Sawiris, Egypt's best-known businessman, is preparing to cede control of Orascom Telecom, the international mobile operator he founded in 1998. The company is evaluating a number of partners that could acquire a major stake or merge with Orascom, Mr Sawiris said in Cairo. "People like me need to start thinking, 'I cannot keep controlling my company, I need to cede control in exchange for shared control'," he said. "But I don't want to be an insignificant shareholder."
The surprise decision comes as Mr Sawiris continues to battle for the company's survival. Orascom has lost more than 60 per cent of its value in the past two years and is now worth 28.8 billion Egyptian pounds (Dh19.25bn). Mr Sawiris, who was ranked as the 60th richest man in the world by Forbes magazine in 2008, has seen his net wealth fall by almost US$10bn (Dh36.73bn) in the same period, dropping to number 205 on last year's list.
The company is facing serious challenges at home and abroad. It is locked in a bitter ownership dispute with France Telecom, its joint-venture partner in Mobinil, Egypt's largest mobile network. After international arbitrators ruled that Orascom must sell its stake in the company to France Telecom, the dispute shifted to Egyptian courts, where it has yet to be resolved. Orascom is the world's eighth-largest mobile company by subscribers, with more than 120 million customers in 10 countries across Africa and Asia.
Industry watchers have predicted a major consolidation of the mobile industry in the coming years, with the high costs of upgrading networks and price competition tilting the sector in favour of the largest players. Mr Sawiris said he believed that in the long term, the global market would shrink to between 10 and 15 international giants, and he planned on his company being one of them. "You won't be able to compete if your size is mediocre," he said, explaining how the world's largest operators can negotiate better prices from equipment vendors and obtain financing at a lower cost. "You take all these weapons and compete against me, and I am in a weaker position."
Without naming specific companies he is in talks with, Mr Sawiris said suitors would come from the "orphan" class of operators that are international but not yet global, with a value of between $10bn and $20bn. Businesses such as KPN of the Netherlands, Russia's Vimpelcom and Telekom Austria fit that category, he said. While Gulf operators are flush with cash and keen for expansion, their sovereign ownership rules them out.
"The civil servants running these companies think they are like entrepreneurs, which is like oil and vinegar in my opinion," Mr Sawiris said. "Secondly, governments being owners is always a problem." In Algeria, the company's largest and most profitable market, the future appears equally troubled. Informed sources say Orascom is being pressured to sell its operation there to a local buyer at a significantly discounted price.
The government is using a contested $600 million tax bill, alongside legal and regulatory restrictions, as leverage, sources said. In both cases, Orascom could receive a significant multibillion-dollar payout in return for selling the operations. Shareholders hoping to see that payout distributed as a dividend are likely to be disappointed; the company plans to focus most of it on growth. "We have targets lined up for acquisitions," Mr Sawiris said in reference to the proceeds of a possible sale in Egypt or Algeria.
"We would reduce our debt partially but most of the money we would use to make a major acquisition, which we have identified." firstname.lastname@example.org