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Orascom’s Q4 loss blamed on troubles in Algeria

Egypt-based operator to consider operations in Algeria following tax dispute and football violence

Orascom executive chairman Naguib Sawiris said he needs to know if the operator is welcome in Algeria.
Orascom executive chairman Naguib Sawiris said he needs to know if the operator is welcome in Algeria.

Orascom Telecom cited strained relations with authorities in Algeria and damage it suffered as a result of violence that flared in the country following a World Cup qualification match as reasons for a fourth quarter net loss of US$46 million.

In its full-year results for 2009, released yesterday, Orascom said revenue for the last quarter of 2009 was $1.3 billion. Net income for the year stood at $318 million, with year-on-year revenue declining by 4.9%.

Naguib Sawiris, executive chairman of Orascom Telecom Holding, said the telecom group had shown resilience "in increasingly volatile and challenging global economic conditions".

He referred specifically to the difficulties of launching operations in Canada, tussles with France Telecom over the ownership of Egyptian mobile operator Mobinil and an unresolved tax claim relating to Algerian subsidiary Djezzy.

"We are keen to stay in Algeria; it is one of our main assets and until this incident we were very happy there," Sawiris said. "However, we need to understand if our investment is welcome there or not. If not, we will consider other options."

In a statement Orascom said that fourth quarter net income "was mainly impacted by the unfavourable events that took place in Algeria, as well as the increase in the tax rate in Pakistan".

It said that the riots that followed the World Cup qualification game between Egypt and Algeria cost Djezzy $55 million as a result of loss of revenue opportunity, damage to stock such as Sim cards, scratch cards and handsets and provision for taxes.

The trouble that followed Algeria's defeat to Egypt sparked a diplomatic incident, with Algeria's ambassador in Cairo summoned by Egypt's foreign ministry to explain the violence.