Hunter and not prey

Naguib Sawiris, the man behind the pending €12.2 billion acquisition of Italian mobile carrier Wind, has made sure private equity investors know his name. Profile by Jonn Elledge.

Naguib Sawiris:bold bid for Wind

If private equity professionals the world over hadn’t heard of Egyptian telecommunications magnate Naguib Sawiris before, they certainly have now.

Sawiris is the man behind the proposed €12.2 billion ($15.7 billion) buyout of Italian telecoms group Wind, and is leading a consortium that also includes Philippe Nguyen’s  French private equity investment group  IPE and New York based buyout house WL Ross & Co. The group, acting under the name Weather, has seen off an €11.6 billion offer from private equity giants Blackstone, Providence and Permira, and until May 30th will be in exclusive negotiations with the company’s owner, power giant Enel.

Sawiris may be new to leveraged buyouts, but he’s an old hand in the telecommunications sector. He inherited his company Orascom Telecom Holdings in 1979 when his father Onsi, a wealthy businessman from Egypt’s Coptic Christian minority, retired and divided his empire between his three sons.

Since then, Sawiris has built the company into the sector’s undisputed regional leader, with annual revenues of $2 billion and more than 14.5 million subscribers. The company has established mobile phone subsidiaries all over the Middle East and Africa, from Tel Zim in Zimbabwe and Banglalink in Bhangladesh.

Last year Orascom took a gamble when it established Iraq’s first mobile phone company, Iraqna. To date the company has picked up half a million subscribers – although it has also had to cope with the kidnap of six of its employees. (All six were retrieved unharmed.)

Sawiris has also expanded Orascom into complementary IT services such as the internet and 3G phones. He has cornered the Egyptian internet market with its ISP subsidiary LINKdotNET, for example, and was also talking about introducing WAP services to his phone networks as far back as five years ago, before they had become established even in Europe.

The desire to make

“It’s our belief that [operational] expertise is available locally. We shouldn’t always be recipients in this part of the world.”

Naguib Sawiris

money is not Sawiris’ only motive for building his business: the ambition of turning Egypt into a regional Silicon Valley also plays a role. “This area has been used to sitting and waiting for these multinationals to come in and help operate our networks,” he told Egypt’s Al-Ahram Weekly in 2000. “It’s our belief that this expertise is available locally. We shouldn’t always be recipients in this part of the world.” It’s for that reason that Sawiris insists on hiring management teams locally instead of bringing in foreigners.

The proposed buyout of Wind, which will mark Orascom’s first move into the more established European telecoms market, is audacious enough: Wind is twice Orascom’s size under most measures, and has never turned a profit. But despite the magnitude of the challenge, Wind isn’t the only expansion Sawiris has in the works.

The company recently acquired, along with Telecom Egypt, a $65 million license to build and operate a fixed-line telephone network in Algeria. It is also consolidating its stakes in its Algerian and Tunisian mobile operations, Djezzy and Tunisiana, by backing back shares that it sold to the Palestinian Investment Fund in 2003. The company is now rumoured to be looking at mobile licenses in Asian countries including India, Burma, Indonesia and Vietnam.

In a recent interview with Italian newspaper Il Sole 24 Ore, Sawiris explained his belief that, somewhere down the line, the currently buoyant telecoms market will slow down and a period of consolidation will follow. And when that happens, he wants Orascom to be in a position to be hunter and not prey.