Orascom Telecom eyes Africa, Pakistan growth - CFO

Egyptian telco also says stand-off with Algerian tax authorities soon to be resolved.

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By  Alastair Sharp Published  August 31, 2009

Egypt's Orascom Telecom wants to expand operations in sub-Saharan Africa via acquisitions and is still seeking a small bank to strengthen its mobile banking offering in Pakistan.

Orascom - which has its biggest operations in Algeria, Pakistan and Egypt - also expects a resolution to its tax stand-off with Algerian authorities within weeks, chief financial officer Aldo Mareuse told Reuters on Monday.

"Telecel, which is our new African subsidiary, will need to consolidate and make more acquisitions," Mareuse said, speaking by telephone from Paris.

Telecel Globe, which provides less than 1.8 percent of Orascom's revenues, exceeded one million subscribers for the first time in end-June figures - from users in Zimbabwe, Burundi, Namibia and the Central African Republic.

"They need to grow more and the objective is to get to 10 (countries)," Mareuse said. In Asia, Mareuse said Orascom was eyeing small banks in Bangladesh and Pakistan, where the firm bid unsuccessfully for Royal Bank of Scotland's unit, to grow its mobile banking offer.

"We looked at certain assets in Pakistan, we have not been successful so far, but we are still very keen to push an acquisition of a bank, to get the banking licence."

Orascom launched mobile financial services in July via Pakistani unit Mobilink in a joint venture with Citibank.

Mareuse said Pakistan and Bangladesh had large populations and under-developed banking services.

The firm has been battling Algerian authorities over a new tax law requiring foreign firms to prove they do not owe tax before they can repatriate dividends to their parent company.

The tax regulator says Orascom unit Djezzy owes $50 million from 2004. Orascom denies this.

"We expect this issue to be settled in the next couple of weeks," Mareuse said. "We have put a deposit of 20 percent ($10 million) to defer the payment while we are talking with the government regarding the exact amount, if any."

Djezzy is the single largest contributer to Orascom's top line, bringing in 40 percent of revenue in the second quarter.

"As Algeria is a main source of profit, dividends from Algeria to OTH are substantial, are very important in terms of the liquidity of Orascom Telecom Holding," Mareuse said.

Naeem analyst Ahmed Adel said in a note that Djezzy's potentially higher tax burden could shrink margins and the row could delay a Djezzy IPO, which he now expects in late 2010.

Mareuse also said he expected Canadian regulator approval by the end of September for a launch of mobile operations in a couple of cities by the end of the year. (Reuters)

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