Orascom Telecom Media and Technology Holding (OTMT) announced it adopted a revised accounting treatment to Cheo Technology JV (Koryolink) during the third quarter of 2015.
OTMT, which owns 75% of Koryolink, deconsolidated the tech company, making it an associate instead of a subsidiary. It has been discussing the possibility to merge Koryolink with the state-owned mobile operator.
“The negotiations are not terminated; it is clear to us from the current discussions that consolidating the asset will be difficult as per International Financial Reporting Standards (IFRS) and Egyptian Accounting Standards (EAS) regulations,” the company said.
It added that this step came as a result of the sanctions on North Korea, which affect OTMT’s ability to impose control over the company, as well as the convertibility of cash and repatriation of dividends to the negotiations outcome.
In October, OTMT and Act Financial announced their intention to acquire 100% of Beltone Financial Holding. OTMT’s share of the offer is 87% and Act’s share is 13%, the transaction value is estimated at up to EGP 650m. Beltone, who are majority shareholders with around 97.4%, responded positively to the tender.
“This confirms OTMT’s new direction to diversify its portfolio from solely telecom and technology based firm to an investment holding company, with special focus on financial services, energy, transportation, and logistics sectors among other lines of business that would create value for its shareholders,” the company said.
Chairman and CEO of OTMT Naguib Sawiris stated that the company’s pending issues will be resolved and that OTMT was forced to deconsolidate Koryolink from the company’s financial statements.
“Meanwhile, we are very optimistic and pleased to conclude the Beltone transaction and we see it as an important step towards the implementation of OTMT’s new strategy of diversification into new lines of business that will create value for our shareholders,” Sawiris said.