Time for Egypt to conquer Rome

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By  Tawanda Chihota Published  March 1, 2007

I have attended several 3GSM World Congresses over the past few years, though never has the shift in power of the global cellular telecoms sector been as pronounced as it was in Barcelona last month.

Indeed, for five years or more, the industry has been obsessing about the growth potential in emerging markets, the basic premise being that already advanced Western operators, characterised by operating in saturated domestic markets with flat revenues, would push into the severely under-penetrated emerging world, in search of strong headline and bottom line growth.

The assumption was that developed world operators would set the pace in the developing regions they chose to expand into, crushing any nascent domestic competition with their experience and deep pockets. This has not turned out to be the case, and it is home-grown emerging market talent that is not only enjoying the benefit of the expansion of communications across their regions, but in fact taking that momentum to developed markets and teaching the incumbents there a trick or two.

Naguib Sawiris, Orascom Telecom's outspoken chairman and CEO, together with Vodafone and Orange CEOs Arun Sarin and Sanjiv Ahuja headlined the CEO session on the second day of the event in Barcelona. Sawiris quipped that a business leader of Egyptian descent and two of Indian descent were headlining the session, representing the metamorphosis of the cellular landscape in favour of emerging geographies and personalities.

Last year Sawiris successfully acquired a controlling stake in Italian telecoms operator Wind for US$12 billion, and last month closed a multi-billion dollar deal to acquire Greek operator TIM Hellas - making Sawiris and his private investment company Weather a force to be reckoned with on a global scale. Naguib was candid about the prospects for growth he saw for the Italian operation, suggesting that it hasn't been difficult to extract value from the company given the poor track record of the pre-acquisition Italian management.

"We have been able to add Euro 500 million (US$657 million) in EBITDA in a year, and grown the number of subscribers by 17-18%," Sawiris said. Orascom Telecom procures all of its equipment requirements for the year from its headquarters in Cairo - centrally, making many of the world's largest suppliers send their most senior representatives to vie for a slice of Orascom business in the historic North African city. The ancient Roman Empire once expanded its sphere of influence to Egypt and beyond, but now it is Egypt that holds sway over Rome and Southern Europe - at least as far as cellular telecoms investments go.

Speaking more than a year ago in Dubai, MTC Group managing director Saad Al Barrak spoke of a time in the future when companies such as his own would be left with no choice but to acquire international cellular companies in order to fuel their ambitions. At the time, towards the end of 2005, such a comment may have been dismissed as Middle East bravado, buoyed by high oil prices and cash rich operators in the region. But as 3GSM World Congress 2007 emphasises, a shift of power in the cellular arena is clearly underway, and operators and personalities hailing from emerging markets are set to exercise ever-growing influence in the sector.

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