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Orascom Telecom eyes Morocco's Meditel

CAIRO: These are dynamic times for Naguib Sawiris and his crew at Orascom Telecom (OT). The country’s largest mobile telecom operator finds itself in the middle of a dizzying array of deals around the globe – all part of an effort to assert itself as one of the planet’s leading telecom firms. The news this …


CAIRO: These are dynamic times for Naguib Sawiris and his crew at Orascom Telecom (OT). The country’s largest mobile telecom operator finds itself in the middle of a dizzying array of deals around the globe – all part of an effort to assert itself as one of the planet’s leading telecom firms.

The news this week is of a new OT venture in North Africa. The company announced that it was considering offering a bid to a consortium of companies that own much of Morocco’s send largest mobile operator, Meditel. OT’s bid would be to manage the company rather than buy any of it, local media reported.

Several Moroccan firms bought 64.4 percent of Meditel for $574 million from a Spanish telecom company. OT had been expected to enter the bidding for Meditel, but it backed off, citing higher than expected prices.

“Given that the consortium which won the majority stake in Meditel is composed of two financial entities, we believe it is likely that these financial companies would seek experienced telecom operators to aid in the running the operations of Meditel, wrote Beltone Financial in a note.

This is hardly Mobinil’s first foray into the world of mobile management. In January of this year, it won the right to manage one of Lebanon’s largest mobile telecom operators, Alfa.

Some analysts indicate that managing mobile companies, as opposed to owning them, is not OT’s aim, but that taking a management role amounts to a foot in the door that may, down the road, lead to ownership opportunities.

To a large extent, OT s investment strategy is that they don t invest in a new market unless the minimum return threshold is 30 percent, said Delilah Heakal, vice president of research at Pharos Holding, noting that taking an ownership role in Meditel would not have met OT’s criteria.

Generally, OT’s strategy seems to be geared towards making smaller acquisitions.

In an interview late last month, Sawiris explained the company’s short term strategy.

We are still making acquisitions and looking at things but they are all small things not worth billions (of dollars) but we are talking about tens of millions or hundreds of millions, he said, according to Reuters.

Heakal says that Sawiris’ strategy is less one of choice than one of necessity based on current options.

The opportunities for large scale investments is limited, she said.

All of this comes at a time when OT is at continued risk of losing one of its major reliable cash cows, Mobinil.

For years, a dispute over the Egyptian mobile telecom giant was tied up in a court of international arbitration, and it ended in a ruling that insisted OT sell its stake in Mobinil to France Telecom (FT).

Analysts met the decision with tempered enthusiasm, saying that though the sale of Mobinil would mean the loss of steady revenue, the cash on hand from the sale could allow OT to buy into new markets.

It would still be very difficult for OT to replace Mobinil with something of that size, said Heakal, noting that the company could use the revenue from the sale to pay down existing debt or make a number of small investments.

But Mobinil is not the only divestiture that OT is seeking. It had announced its intention to sell an Algerian fixed-line operator. That sale, though, has been put off after none of the bids proved adequate to OT executives.

The company is also looking to sell of Egypt’s second largest internet operator, LinkDotNet. Mobinil and Telecom Egypt (TE) are the two bidders, and OT said it would announce the winner in November.

The sale of LinkDotNet, according to analysts is part of Mobinil’s efforts to get rid of non-core businesses. Heakal called it part of “a general cleanup of the portfolio. These moves have made investors more bullish on OT. The stock, listed on the Egyptian exchange, was sold for below LE 20 back in February in March. Since then, the price has steadily climbed and today sells for around LE 36.

Topics: FJP

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https://www.dailynewsegypt.com/2009/09/14/orascom-telecom-eyes-moroccos-meditel/
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