Subsidiary Mobinil enters 3G negotiations with NTRA
SINGAPORE: Orascom Telecom (OT) Chairman Naguib Sawiris said Monday the company is looking to buy a controlling stake in Hong Kong s Hutchison Whampoa s (HW) emerging markets phone unit.
Speaking on the sidelines of a conference in Singapore, Sawiris said negotiations are now underway for OT s acquisition of at least a controlling stake, or possibly full acquisition of HW, but declined to comment on share price. OT already controls 23 percent of HW after acquiring 19.3 percent of the firm last April for $1.3 billion (LE 7.5 billion).
We are in constant talks over the price, to come to a price that is fair to both parties, Sawiris told Reuters. We want to at least get to a controlling stake.
A HW spokesman declined to comment on a possible deal with OT, but said the company does not plan to sell more of its shares.
Orascom Telecom operates mobile networks in Algeria, Pakistan, Egypt, Italy, Tunisia, Iraq, Bangladesh and Zimbabwe. Sawiris said combining the equipment procurement of Orascom and Hutchison Telecom would help increase leverage with suppliers, reducing the cost of network expansion for both firms, according to Reuters. He adds that acquiring a controlling stake of HW would help the company expand in other lucrative Southeast Asian markets such as India, Indonesia and Vietnam.
There s still a big chunk of growth [in those countries], he said.
HW is also a multi-national mobile network operator with networks in Hong Kong, Thailand, Israel, Macau and Ghana.
Sawiris said OT aims to widen its subscriber base to a total of 50 million by the end of this year, up from 30 million at the end of 2005.
Regarding 3G technology, Sawiris announced that Mobinil is in negotiations with the National Telecommunications Regulatory Authority to apply for a 3rd Generation license, although no official resolution has been announced regarding NTRA s dispute with Mobinil regarding the latter s use of EDGE technology.
I don t like 3G, but I might apply for it and deploy it at a later stage, Sawiris said. We won t be in a hurry to deploy it.
In early September, Mobinil agreed to suspend using Enhanced Data for GSM Evolution (EDGE) technology until its dispute with NTRA was resolved, or face penalties from the authority. Mobinil argues EDGE, which offers customers data-transfer speeds high enough to carry streaming audio and video, is classified as 2.75G and is recognized as such by the GSM Association, an international support body.
In Cairo, EFG Hermes senior analyst Wael Ziada says Mobinil has a case, but it s unlikely NTRA will allow the company to continue using the technology for free.
Edge is not a 3G technology, it s a 2.75G technology, Ziada told The Daily Star Egypt. No where else in the world does an operator offering EDGE have to acquire a special license. But NTRA is looking at the case from a product standpoint, not a technology standpoint, which is what matters to the customer at the end.
NTRA says EDGE is a 3G technology that requires the acquisition of a special operator s license, now valued at LE 3.3 billion.
In 2004, Mobinil had installed some of the equipment that uses EDGE technology on an experimental basis, NTRA said in a statement. The company had agreed not to use the equipment in commercial purposes except upon approval from NTRA.
New third mobile network operator, Etisalat Egypt, already has a 3G license in hand after winning the mobile operation license for LE 16.7 billion in July. Vodafone Egypt has not yet announced its decision to acquire the license, but according to Al-Akhbar, the company has also entered negotiations with NTRA.
The Egyptian mobile market now serves more than 14 million customers, with Mobinil commanding about 7.2 million. -Reuters/additional reporting by Ahmed A. Namatalla