Interview: Naguib Sawaris, ceo Orascom Telecom (page 1 of 2)

Q. When Fastlink started, was your idea that the Jordanian market was small and that there was room for growth - were you going to take this small company, expand it and then sell it - or did you sell Fastlink because you had so many debts that you had to do it?

A. It's the second answer. When I started, of course, it was not in my dreams at all that I would sell Fastlink one day. There's a basic part of our strategy - it's one of the nicest, most appropriate Arab countries with a lot of stability, a positive investment climate and so on. So, it was not in the program. The reason for selling Fastlink was clearly that we had overexpanded.

Our ambitions were beyond our means, and we had to make a sacrifice to keep the company sound in an environment where there is so much turmoil. Look at all the telecom companies and their suffering and their share decline and the environment as a whole. In this kind of environment, we needed to take some painful steps in order to safeguard the company. We can see from the action on the share price that we have done the right thing. But, frankly speaking, we would have preferred to keep it.

Q. Fastlink was the second-most profitable mobile phone company in the Orascom stable. Wasn't there a risk that by reducing debt in the short term, you would reduce profitability in the long term?

A. No, because, frankly speaking, our business is about value creation. And we think that the value that we sold Fastlink at is a good value in the current circumstances. With this sale, we are given the opportunity to create value in the other large subsidiaries which have not reached their final maturity yet. Having a debt-free holding today and having properties, which are still in their beginning with a lot of growth potential is a good position.

Q. Which subsidiaries have the largest opportunities for growth?

A. We shall start with Pakistan. It's a country with more than 140 million people. We are now adding 1 million subscribers per year. It's a very profitable operation. We are making $45 million in net profits.

The second one is Algeria. We got 350,000 subscribers in 10 months. It's a country with 34 million people with very low penetration, both on fixed and mobile. The third country I still believe will also produce value is Egypt.

There is an economic decline in Egypt, but we are adding 400,000 subscribers per year. In Tunisia, where we have just started, I have to say that we have been completely shocked by the demand. We have never thought - in our nearest calculations - that in the first month of operation, we would have 100,000 subscribers. We are now adding 5,000 subscribers per day.

Q. Who's the competition in Tunisia?

A. The government, Tunisia Telecom. The government-owned company is the only competition.

Q. Why are the subscribers choosing you over the state?

A. They are not. The fact is that we have entered the market at a time when the government company has not yet expanded its network, so there was no availability on the other side, which will soon be over because they've announced that they've expanded their network up to 500,000.

So, the competition will soon start. But what is peculiar in Tunisia is that the wealth is very well distributed somehow. The middle class and lower class are both well defined, and that's why I think we'll continue seeing growth there.

Q. What about the wealthier Arab countries with closed markets?

A. Today, Orascom is the only Arab operator that is recognized as a regional operator and that fulfils all of the pre-qualification requirements in any tender procedure because of our diversity, because of the number of subscribers.