Orascom says may sell Iraq unit

Egyptian telecom could sell its Iraqna subsidiary after dropping out of race for long-term mobile licence.

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By  Lynne Roberts Published  August 19, 2007

Egypt's Orascom Telecom said on Sunday it may sell its Iraqi subsidiary after it dropped out of a race for a long-term mobile licence in the war-torn country.

Orascom also said it would not submit another bid to acquire Egyptian communications and technology firm Raya after the firm rejected Orascom's
first offer.

Orascom, which had operated the subsidiary, called Iraqna, under a short-term licence after the invasion in 2003, said the $1.25 billion price and 18 % revenue sharing for a longer-term licence in Iraq were too high.

Iraq sold three 15-year mobile licences for $3.75 billion to Kuwait's Mobile Telecommunications Co., Asiacell, and Korek last week.

"(Orascom) is currently evaluating alternatives to monetise the assets of Iraqna including sale or joint venture," the firm said in a statement. Company officials declined to give more details.

Iraqna, the first company to provide a full mobile phone service in Baghdad after the 2003 invasion, had around 3 million subscribers, it said on its Web site.

Orascom had invested almost $300 million in Iraqna, which accounted for about 11 % of its revenues, said Walaa Hazem, telecom analyst at HC Securities in Cairo.

Potential buyers could be Asiacell or Korek, who are likely to prefer buying an existing operator rather than set up new infrastructure, Hazem said.

Asiacell began operating in the Kurdish north of Iraq in 1999. Korek Telecom is based in the city of Irbil in Iraqi Kurdistan.

Asiacell, an affiliate of Qatar Telecommunications Co. would consider buying Iraqna, an Asiacell shareholder said on Sunday.

"If the opportunity comes up, we will look at it," said Basil al-Rahim, managing partner of Merchant Bridge, a UK-based investment bank that holds 19 % of Asiacell.

Iraqi mobile use rose to 8 million out of a population of 26 million at the end of 2006, from virtually nothing three years earlier, according to officials.

Orascom also said it would not raise its bid for Raya, an information technology provider, from 12 Egyptian pounds ($2.12) per share.

An independent valuer found the offer undervalues Raya, Egypt's Capital Market Authority said last week.

Raya Chairman Medhat Khalil told Reuters on Sunday that OT withdrawal was expected. "It was obvious they were not serious giving the offer at this low price," he said.

Orascom shares were down 1.5 % to 71.50 pounds at 0941 GMT. Shares of Raya were up 0.7 % at 13.67 pounds.

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