Contrarian investor eyes Cuba

Contrarian investor eyes Cuba
By Andrew England
Published: May 14 2008 17:35 | Last updated: May 15 2008 06:33

Naguib Sawiris, the Egyptian telecommunications tycoon, is no stranger
to controversy and always seems to have an eye on the next opportunity.

Often he is looking where few others would dare, and today the chairman
of Orascom Telecom, a leading emerging markets mobile phone operator, is
thinking about the possibilities in Cuba. That follows the decision by
Raúl Castro, Cuba's new president, to lift a ban on the sale of
computers, microwaves and – crucially for the Egyptian businessman –
mobile phones.

That Mr Sawiris should be turning his attention to the Caribbean state
should come as no surprise.

He was one of the first businessmen to invest in Iraq after the US-led
invasion before selling his Iraqna network in the war-torn country for
$1.2bn last year. He is also locked in a battle with authorities in
Zimbabwe over Telecel Zimbabwe after the regulator revoked the licence
of the operator, saying Orascom, which owns 60 per cent of the company,
had not met a deadline to transfer a majority shareholding to local
investors.

Yet undeterred Orascom, which was set up 10 years ago, announced it was
investing $400m in another pariah state earlier this year – North Korea.

In between, the eldest of the three Sawiris brothers, members of Egypt's
Christian minority, has been listed by Forbes magazine as the third
richest businessman in the Middle East with a fortune estimated at
$12.7bn. There was also the less rosy news that he was under
investigation by Italian prosecutors for alleged corruption in his
private investment company's purchase of Wind, Italy's third-largest
mobile operator, in 2005.

Still, Mr Sawiris, who strongly denies any wrongdoing, is not letting
the investigation get in the way of his business plans.

"It's annoying, but it's not impacting any of my plans," he says in his
office in a sparkling high-rise tower that was built by his brother's
construction company and is perched above the Nile in the heart of Cairo.

Mr Sawiris first went to Cuba five or six years ago when he was thinking
of setting up a Latin America project. That trip failed, and now he is
watching to see if Havana's attitudes are changing.

"If they are now willing to let people use mobiles and change the
direction of the economy in [the] same way [as] in North Korea . . .
then of course we are interested," he says. "We are just waiting to see
if there's an initial interest or not so we are trying to test before we
go."

Mr Sawiris – who used to complain of losing customers in Iraq because of
the war's high death toll – plays down the risk attached to investment
in North Korea, notoriously listed by the US administration as part of
"an axis of evil".

"If you told someone years ago that East Germany and West Germany were
going to be one country, people would look at you and think you were
crazy. So when the Berlin Wall fell down, and that happened, nobody
thought that it could happen, and it happened," he says.

"So the potential is very easy. I believe very genuinely in the wish of
the leadership in [North Korea] to convert from the communist economic
system to the open market economic system."

Ultimately, in a market that Mr Sawiris believes is becoming
increasingly saturated, he wants to be "controlling one of the five
biggest [telecoms] companies in the world".

There has been much speculation that Orascom – which reported revenues
of $4.7bn for 2007, up 22 per cent, and earnings before interest, tax,
depreciation and amortisation of $2bn, up 20 per cent – was about to be
sold as part of the industry's consolidation. Mr Sawiris says Orascom
has been approached by European operators. But when asked if he is in
discussions or if any deals are moving forward, he says: "I cannot
comment now."

Mr Sawiris adds: "The only thing that I'm ready to [say] right now is
that I don't want to stand still.

"I don't want it (Orascom) to stay as it is now. I would like to do
something bigger with any player, either as an acquirer or, if I'm going
to merge with someone, I will only merge if I have substantial influence
in the new merger."

He says the news that MTN, a Johannesburg-listed company, is in talks
with Bharti Airtel that could lead to the Indian group buying a
controlling stake in the South Africa group, confirms what Mr Sawiris
says is the future trend for the sector.

"Every time something like that happens the competitors get less and
less, it confirms my opinion that we need to become bigger, do
something," he says.

Other projects he is working on include plans to launch a company by
September offering banking services to Orascom's 70m customers and
another wholly owned Orascom subsidiary to manage operations in smaller
countries. That entity would be interested at acquisitions in markets
with 5m-20m potential customers, Mr Sawiris says.

The group already has investments throughout Africa and the Middle East
and mobile banking is seen as a future area of growth as many people in
developing countries lack access to conventional banks.

http://www.ft.com/cms/s/0/6aafb746-21c9-11dd-a50a-000077b07658.html?nclick_check=1