`Tough to find local partner'

Thomas K. Thomas

Singapore, Oct. 16

The Egypt-based telecoms service provider Orascom said that it was looking to increase its stake in Essar Hutchison by hiking its holding in Hong Kong-based Hutchison Telecom. Orascom said that it was interested in increasing its presence in the booming cellular market in the country through this route as its attempts to find a local partner had failed.

Speaking to

Business Line

, Mr Naguib Sawiris, Chairman and Chief Executive Officer, Orascom, said, "We are interested very much in the Indian market and we are hoping to increase our stake in Hutchison. We had tried in the past to invest in India through a local partner but we found it difficult."

Orascom currently holds about 9 per cent in the Indian cellular venture Hutchison Essar after it had acquired nearly 19 per cent in Hutchison Telecom. Orascom's indirect entry into the Indian telecom market was earlier raked up by the Essar Group, which had pointed out that its consent had not been taken before the international deal between Orascom and Hutchison took place.

Essar had said that such international deals could bring in investments from companies in unfriendly countries. Some of the security agencies had also expressed concerns with investment. The Government has, however, given its approval to the investment, which paves the way for Orascom to further increase its stake. Foreign Direct Investment level in Hutchison Essar is currently at 68 per cent.

Speaking at the 3GSM World Congress Asia, Mr Sawiris said that Orascom was not lucky enough to find a partner in India unlike TM (formerly Telekom Malaysia) and Sing Tel who have partnered with Spice and Bharti respectively. "We decided to invest in Hutchison Telecom because it has operations in countries such as India and Vietnam where we had failed to make an entry due to local circumstances. We are hoping that Hutchison would agree to gives us more equity in the company."

No 3G votary

Orascom offers telecom services in Pakistan, Italy, Algeria, Bangladesh, Iraq, Tunisia, Bangladesh and Egypt. It had 17 million subscribers as on March 2006.

On the technology front, Mr Sawaris said that he was not a great fan of 3G technology and it may be prudent to delay the launch and wait for the right price points before offering it to consumers. When asked about the advantages of acquiring equity stakes in emerging telecom markets, Mr Sawaris said that there was not much opportunity with greenfield projects and therefore acquisitions made more sense.

Bullish on India

TM (formerly known as Telecom Malaysia) said that it was expanding its operations in India with its partner Spice Telecom by acquiring licences for more circles. Mr Dato' Abdul Wahid Omar, the company's Group Chief Executive Officer, told

Business Line

that the company was hoping to move from being a two circle operator in India to having pan-India services. Mr Wahid Omar said that Indonesia and India were its key investments as the markets in these countries were growing at a rapid pace. Mr Lee Hsien Yang, CEO SingTel Group, said the growth from Bharti Airtel was contributing significantly to its international operations. "Bharti is adding close to a milion subscribers a month compared to 20,000 being added in Singapore in a quarter."

(This article was published in the Business Line print edition dated October 17, 2006)
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