Mobile operator: Naguib Sawiris

In nine years, Egyptian entrepreneur Naguib Sawiris has built Cairo-based Orascom Telecom into a global force, with 41 million subscribers worldwide.

by Ian Fraser, World Business
Last Updated: 23 Jul 2013

The company, which is a leader in the pre-paid cellphone market, has operations in Algeria, Tunisia, Egypt, Iraq, Zimbabwe, Pakistan and Bangladesh. Last year it pulled off one of the biggest leveraged buy-outs in history with the acquisition of Italian mobile company Wind, in a $15 billion deal. Group turnover last year was $3.2 billion, a 64% rise on 2004, while pre-tax profits rose 56% to $857 million.

Its shares have climbed in value from less than $1 in 2002 to $53 today, making Orascom Telecom one of the world's best-performing companies. From a Coptic Christian family, Sawiris is frank about his strong faith. Orascom Telecom is part of Orascom Group, which Sawiris' father, Onsi, founded more than 50 years ago. The wider group is also involved in hotels, property development and construction. Forbes estimates that Sawiris has personal assets of $2.6 billion.

He has a diploma in mechanical engineering and a Masters in technical administration from the Swiss Federal Institute of Technology in Zurich, and speaks Arabic, English, German and French.

WB: What is your strategy in turning Orascom into a global force? Which brands does the company operate under in each market?

Naguib Sawiris I'm not a believer in the Vodafone and Orange approach to global branding. When you come as a foreign investor, you're already at a disadvantage, so why make matters worse by having a foreign brand? It's better to use local brands that reflect the environment of each country. So in Algeria, we named the company Djezzy - which is the Algerian name for Algeria as well as being the Arabic word for 'reward'. We have also chosen names that are aligned to national identity in Tunisia, Iraq and Egypt. What we've done is to create the perception in each market that this is a company that understands the culture, wants to identify itself with the country and makes people proud of their country.

Since 2002 you have retrenched at Orascom Telecom, disposing of assets and reducing the number of countries in which you operate from 22 to six. Why did you do this?

The 14 countries that we disposed of were causing 85% of our management headaches, but generating only 5% of our Ebitda [earnings before interest, tax, depreciation and amortisation]. By disposing of these assets, we freed up management time to focus on the countries where we are strong and big - such as Algeria, Egypt, Iraq and Pakistan. Disposal of those countries played a key part in enabling us to become operationally excellent. We are the most dominant player in most of our markets, although we were not the first into all of them.

What are Orascom's ambitions for further expansion?

The problem is that there are very few new markets for mobile telecoms. The only thing we're looking at, at the moment, is the third licence in Saudi Arabia, which is due to be awarded in the last quarter of this year. The way we are going to win it will be unique and we are not going to overpay. We have shown a lot of discipline in the amount that we are prepared to bid. This has meant that we missed out on licences that came up in Serbia, Turkey and Iran. We were not prepared to match the horrendous numbers that were being paid.

Has Orascom adopted a different approach to bidding for licences since 2002?

We have never overpaid. Some people like to claim that we overpaid for the licence in Algeria. There, we paid $757 million for a licence that turned out to be the leading licence for Algeria. This was because the incumbent was so inefficient. The third licence in Egypt, a country where mobile penetration is reaching 30% to 40%, went for $3 billion. That was sold to Etisalat [an expansionary telecoms group based in the United Arab Emirates].

Do you believe Orascom Telecom will achieve its target of having 100 million subscribers by 2010?

I think we will reach that by 2008. We have already passed 40 million subscribers.

How important has advertising been in building up the different brands within Orascom Telecom?

It has been critical. But it's not just about building the brand; it's also a sales tool. In fact, advertising is the most powerful sales tool; we have advertising budgets into the hundreds of millions of dollars.

Can you describe how you pulled off the acquisition of Italian mobile telecoms company Wind, and how you are integrating it?

There were only two bids: ours and one from a private equity consortium made up of Blackstone and Goldman Sachs. In the end, we bought 100% of Wind, but then we shared a little bit with the former owners, Italian energy company Enel, which now owns 30%. We paid about EUR12 billion ($15 billion) for a company with 15 million mobile phone subscribers, 2.5 million fixed-line subscribers, and which also owns Italy's largest internet portal, Libero.

Have you installed Egyptian managers to run Wind?

We have only about five Egyptian people.

Are you pleased with the purchase of Wind and how well are you doing in terms of making savings and integrating the business?

Frankly, we are more than pleased. There are a lot of synergies, cost-savings and improvements that we can bring to this company, and these are going to materialise very fast.

Are you looking to acquire other mobile telecoms companies in Europe?

Yes, we will be looking at Tim Hellas, a mobile company that Apax Partners is selling in Greece. I think that Apax will be looking for offers later on this year, but we won't know if we've been successful until next year.

There is a view in some quarters that companies from emerging economies might somehow be inappropriate owners for mobile telecoms companies in the developed world. How do you feel about that?

I've never heard it put that bluntly before, but I have heard it said. This business is the same everywhere. You sell handsets and mobile phone lines, you service those lines, you build networks, and it is the same wherever you do it. Thinking that because an asset is located in Europe, where competition is more intense, where the market is more penetrated, that the business needs different management is a joke.

What do you think about the 'economic nationalism' that we have recently seen in Europe and the US, with governments stepping in to prevent ports, energy and yoghurt companies from being acquired by oversees rivals?

Economic nationalism seems to be on the rise in Europe, which is surprising as you would have thought that when they created the EU they would have dealt with such issues. I find it dangerous. It could hamper globalisation and economic prosperity in Europe and the rest of the world. It's very dangerous because it's a set-back that will lead to protectionism and it will be anti-global.

Is there a Middle Eastern business model, and if so how well does this translate when a company goes global?

The issues about running a business do not change according to geography. Our companies, because they have dual listings in London, have to be very transparent; they have to have the same governance and regulation. We have shareholders. If you want to be a global player, you have to abide by the global rules. The rules are that you should be transparent, have good ethical conduct, good management succession, clarity and all these issues. We would not be successful with our listings and in our markets if we did not adhere to this. It means that when we do go global, we are already prepared.

How would you describe your management style?

My first focus is to get the best people in the industry around me. I delegate a lot, but I stay involved. It's unique. I am a perfectionist, so I go into the ultimate details. Sometimes I'm cautious, but I'm not scared of risks.

What sort of qualities do you look for when you're recruiting people to become the next tier of management within Orascom Telecom?

Integrity, sharpness and intelligence, hard work.

Do you rate MBAs?

Of course ... aren't they rated everywhere?

There have been reports that you have been having service problems with your Iraqna operation in Iraq. How many subscribers do you currently have there?

We have about 2.5 million subscribers. There have been problems because we are working under very severe circumstances. We have had sites bombarded, we have had staff kidnapped, equipment stolen, hijacked. It is not a normal environment. However, we have managed to service 2.5 million subscribers, so under difficult conditions we are not doing too badly.

Have any of your employees been killed in Iraq and would you ever consider withdrawing?

No, but two employees of Kenyan origin have been missing for six months or so. No, we wouldn't withdraw.

Following the acquisition of a 9% stake in Israeli mobile telecoms player Partner Telecommunications last December, have the Israelis expressed any fears that one of their mobile providers is partly Arab-owned?

If we are talking about peace in this region, then business should flow both ways. Very few business people would dare to make such an investment, so I'm hoping they will see this as a good move towards peace. If we want this region to prosper, then we have to encourage business on both sides.

What are your views on last summer's conflict between Israel and Hezbollah?

Hezbollah lost my respect when it became an agent of Syria and Iran, and I also believe that Israel has a right to defend itself. I don't think there was a winner of that war. I think both parties lost. I believe the Lebanese are very capable people; the challenge that remains is what's going to happen to Hezbollah's weapons. If you do not resolve the Iranian and Syrian issue, Hezbollah will always remain a destabilising force.

Is there still an anti-capitalist bias in Egypt and in the Egyptian government?

This is old news; the government is pro the private sector and has demonstrated that in a lot of the laws it has initiated.

Do you have ambitions to get into broadcasting?

I am already in it. I'm a big investor in a few TV stations and a production house. But it's personal; it's not through Orascom. I am just an investor.

Why is it you are not afraid to take risks?

The reason I'm not afraid to take risks is that I have two things that help. I have a very strong belief that God is on my side and I do a lot of good in my life, and I think this helps my relations with God. My belief is very strong and if you believe in him, he will not let you down.

Other than your faith, what else drives you to build Orascom into a serious global player?

My ambition. I am a very ambitious person - the sky's my limit. What keeps me going every day is also my excitement in life; it's like a drug, you know. It's not financial. If I did have any financial issues, I resolved them many years ago.

What sort of relationship do you have with your father?

He is the source of all our business activities and we went into business because of him. He's my friend and the most important person in my life. He is not involved in Orascom Telecom, although he is on the board. He has another business unit that he heads and he is on most of the boards of my brothers' companies. I call him in the morning, I call him in the evening and I have lunch with him four times a week.

NAGUIB SAWIRIS

ON ORASCOM'S STRATEGY: I'm not a believer in the Vodafone and Orange approach to global branding. It's better to use local brands that reflect the environment of each country

ON RETRENCHING: Disposal of those assets freed up management time to focus on the countries where we are strong and big

ON FURTHER EXPANSION: The problem is that there are very few new markets for mobile telecoms. The only thing we're looking at is the third licence in Saudi Arabia

ON THE BUSINESS MODEL: Our companies have dual listings in London, so they have to be transparent; they have to have the same regulation. If you want to be a global player, you have to abide by the rules

ON MIDDLE EAST PEACE: If we are talking about peace, business should flow both ways. If we want this region to prosper, then we have to encourage business

ON TAKING RISKS: The reason I'm not afraid to take risks is that I have two things that help. I have a very strong belief that God is on my side and I do a lot of good in my life.

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