Orascom Reports Losses of US$170 Million

Egypt’s Orascom Telecom has posted a net loss of USD169.53 million in the last three months of 2010 on the back of both the depreciation of the local currency against the US dollar and increased pressure in foreign markets.

The company noted that as its primary accounts are held in Egyptian pounds the appreciation of the US dollar against the local currency had ‘had a significant effect on the mark to market value of the US dollar denominated debt at Orascom Telecom Holding of approximately USD3.5 billion.’ 


For the twelve months ended 31 December 2010 Orascom posted a net profit of USD781.45 million, more than double the USD378.63 million reported for 2009, which the company attributed predominantly to gains recognised as a result of its revised agreements with France Telecom regarding the ownership of Egyptian cellco MobiNil.

In terms of turnover, in 4Q 2010 Orascom reported revenues of USD980 million, while full-year revenues totalled USD3.825 billion, up 2% year-on-year; Orascom noted that it was not including results from Orascom Telecom Tunisia, which the company agreed to sell in January 2011.


All of the group’s subsidiaries reported revenue growth bar Algerian operator Djezzy, which Orascom noted had endured ‘the persistence of an adverse operating environment.’ Earnings before interest, tax, depreciation and amortisation (EBITDA) in 4Q10 stood at USD402.24 million, while in FY2010 it was USD1.584 billion, up 4% y-o-y. 

At end-December 2010 Orascom’s consolidated subscriber base was 101.683 million, with its Pakistani unit, Mobilink, accounting for the largest number of those, some 31.794 million, up 3.2% against end-2009. MobiNil reported a wireless subscriber base of 30.225 million at the end of the year, up almost 20% against end-2009, while the largest percentage increase was reported at Telecel Globe – which comprises the group’s operations in Namibia, Zimbabwe, the Central African Republic and Burundi – where customer numbers increased by 77.8% to 3.242 million.


Bangladeshi unit Banglalink meanwhile reported a subscriber base of 19.3327 million at 31 December 2010, up almost 40% compared to the same date a year earlier, which Orascom said was the result of aggressive acquisition and strong customer retention strategies.

Commenting on the results Khaled Bichara, Orascom’s Group CEO, said: ‘The year 2010 has proven to be a year of significant milestones aiding the growth of Orascom Telecom Holding on an operational and strategic level.’

Telecel Zim Plans To Comply With Ownership Rules

Telecel Globe, a part of Egyptian group Orascom Telecom, has submitted its proposals to reduce its 60% shareholding in cellco Telecel Zimbabwe to 49% to comply with the country’s indigenisation regulations. A letter containing the proposals was submitted to Transport, Communication & Infrastructure Development Minister Nicholas Goche and Indigenisation & Empowerment Minister Saviour Kasukuwere, Zimbabwean Sunday newspaper The Standard reports. Telecel Globe said in a statement that the letter was approved by both of the GSM operator’s shareholders, holding company Telecel International and the local Empowerment Corporation.

The statement added that ‘there are no other shareholders in Telecel Zimbabwe and there never have been any others, although some people seem intent on misrepresenting themselves as being shareholders,’ referring to various claims on the company’s future ownership rights, mostly from individuals associated with groups that make up the collective Empowerment Corporation stake.

Telecel International, as a foreign shareholder, was obliged, both in terms of the Indigenisation Act and the licence that regulator POTRAZ issued to Telecel Zimbabwe in 2002, to reduce its shareholding from 60% to 49%. ‘Section 12.1.3 of the licence states that the licensee shall within five years from the date of signing of the licence ensure that the foreign ownership is reduced to 49%,’ the statement said, whilst clarifying that ‘It has not been possible, due to hyperinflation, to reduce shareholding within the stipulated period through the sale of shares, as nobody in Zimbabwe was able at the time to guarantee international euro or United States dollar loans.’

Four ZAMTEL Bidders Submit Bids

Of the eight companies shortlisted in the sale process of a 75% stake in Zambian fixed line incumbent Zambia Telecommunications Company (Zamtel), only three have submitted bids. According to the Times of Zambia the three foreign companies to submit their offers to the Zambia Development Agency (ZDA) for the telco are India’s Bharat Sanchar Nigam Ltd (BSNL), Unitel of Angola and Libya-based LAP Greencom.

A fourth bid, from a consortium of Russia’s Vimpelcom and the telecoms arm of the Alfa Group, Altimo, was understood to have been sent on time, but reportedly arrived at the ZDA offices five minutes after the submission deadline as a result of ‘logistical reasons’. The bid however was still considered, and the ZDA board confirmed that Altimo’s non-binding offer had been accepted today. The four companies that had been shortlisted but chose not to bid were Telkom South Africa, BSNL’s fellow state-owned Indian telco Mahanagar Telephone Nigam Ltd (MTNL), Portugal Telecom and a consortium of Egypt-based Orascom Telecom and its subsidiary Telecel Globe.

ZDA acting director general, Muhabi Lungu, after opening the bids said the ZDA would now study the offers, while also passing the details on to the board of Zamtel for its evaluation. Mr Lungu has stated that the ZDA will announce which of the companies will move on to the next stage in the sale process on 11 January 2010, where another due diligence would be undertaken before the successful bidder is chosen.

New Zamtel Owner To Revitalise Company

­Zamtel's new owner could revitalise the company, gaining a 19% share of the mobile market by 2015, up from its current 4% share. According to Onda Analytics, the privatisation will lead to a major operator taking over Zamtel, providing a serious threat to existing Zambian mobile operators, Zain and MTN.

Interested parties, including MTNL, Telecel Globe (a subsidiary of Orascom), Telkom SA and Vimpelcom officially began due diligence this week.

According to report lead author, Daniel Jones (Partner), "The new investor will have to turn around an operator in crisis. A strategy along the lines of a new entrant will be needed, as Zamtel has fallen further and further behind in the mobile market. High mobile tariffs and low penetration in Zambia present an opportunity for the buyer. Aggressive price competition and going after subscribers new to the market will help Zamtel grow its market share and challenge its competitors".

Onda Analytics' new report considers the strategies that a new owner will need to adopt in order to turn the operator into a significant mobile player in Zambia. Under the right strategy, Onda Analytics forecasts Zamtel to grow its mobile market share from 4% in 2009 to 19% by 2015, increasing its subscriber base from 160 000 to 1.8 million. The report also analyses the strategic importance of Zamtel's other assets, including its fixed line network and the WiMAX network currently in deployment.

On top of increasing revenues, Zamtel will need to keep a close check on costs. "Zamtel's bloated cost base, as a result of its large headcount, has led it to insolvency and the current privatisation process" explains report co-author, Tom Harden, Partner at Onda Analytics. "Today, all the operator's unionised staff have agreed voluntary redundancy. A massive staff reduction programme will be need to be carried out by whichever company takes over Zamtel. The union has recognised this, hoping to get the best redundancy packages for its members by negotiating the government now, rather than the new owner later" explains Harden.

Orascom Buys Namibia's Cell One

Telecel Globe, a subsidiary of Orascom Telecom, has acquired the Namibian mobile network operator Cell One for USD 59 million in cash, of which USD 32 million was already paid and the balance is due in January 2010.

Cell One operates a GSM 900/1800 network and has 198,000 active subscribers and over 20 percent market share. The acquisition will further enable Cell One to grow its customer base and deliver new services. Namibia had a mobile penetration of close to 50 percent at the end of 2008. 

These acquisitions are part of Telecel Globe's strategy to target licences and mobile operators in small and medium-sized developing countries that have high growth potential.