News, views and commentary from the telecoms sector across emerging markets and developing countries worldwide

Friday, 27 November 2009

Telecoms operators in developing countries are always owned by telcos from richer nations and never the other way round... right?

Bouygues Telecom: eyed by Egypt's Orascom

While the focus DevelopingTelecomsWatch is generally on communications sector businesses in emerging markets and developing countries, a battle between incumbent mobile operators and a proposed new entrant in Canada has been covered here of late.

While events in the vast North American country are clearly beyond the usual remit of this blog, two factors go some way towards justifying the interest of DTW in this particular story.

The first of these is possibly a bit frivolous - simply the observation that despite Canada's G8 membership and status as one of the world's most affluent countries, its mobile communications industry lags behind that of many far less wealthy countries in terms of market penetration. The second factor which justifies spending some time on this story is the fact that the wannabe new cellco in Canada has its roots in Egypt and is affiliated with that country's first multinational corporation. That Egyptian company, Orascom Telecom, has built a global business across a number of developing countries, including Pakistan, Bangladesh, Algeria and Zimbabwe.

I remember sitting in the auditorium at the 3GSM World Congress in 2007 and smiling at the rather direct language used by Orascom Telecom supremo Naguib Sawiris. As Richard Wray of the Guardian also noted a the time, the opening speeches (including those from Orange's then-CEO Sanjiv Ajuha and Vodafone's then-CEO Arun Sarin) were somewhat in line with what conference veterans have come to expect - carefully prepared, lots of positive stuff about mobile communications enriching consumers' lives.

Sawiris eschewed this kind of talk altogether, preferring to announce that he was in the business for the money. While this element of the Egyptian tycoon's speech is what stood out for Richard Wray, it is another remark that interested me and which has informed my thinking about the telecoms sector. Sawiris smiled about three giant multinational mobile groups being represented on stage at the World Congress by two Indians and an Egyptian. The point, I think, was to illustrate the shift of this industry's centre of gravity southwards and eastwards from the developed economies of Europe and North America.

Having grown up with the comfortable notion of European and American countries building operations in developing countries and extracting profits therefrom, it has been interesting to watch Orascom Telecom working in the opposite direction. Weather Investments, an investment vehicle controlled by Sawiris, holds more than 50% of Orascom Telecom, and also owns Italy's Wind Telecomunicazioni and Wind Hellas of Greece.

The current attempt to shake up the telecoms sector of a highly developed economy like Canada is, then, not without precedent for Sawiris.

In Canada, however, as noted here before, however, there is fierce resistance to the arrival of Wind Mobile. For now, the prospect of a commercial launch has been stymied by a Canadian Radio-television and Telecommunications Commission ruling that the company in breach of rules on foreign ownership and control.

Today, in response to this setback, Wind Mobile has launched a campaign "geared at letting Canadians know that when it comes to wireless service, they deserve more." The goal of the campaign, runs the company's press release, "is to raise awareness about the current state of Canada's wireless industry compared to the rest of the world, and to highlight why more choice is essential."

"The heart of the issue is that Canadians pay some of the highest rates for some of the most complained-about wireless service in the world," said Anthony Lacavera, Chairman of Wind Mobile. "This campaign is about focusing the conversation to the need for real wireless competition in Canada in order to lower prices, increase penetration and finally deliver the kind of customer service that has been sorely lacking for Canadians."

Others in Canada, however, have expressed the opinion that while Orascom Telecom has probably been treated unfairly, and while the country's rules on foreign investment urgently need changing, it would be a mistake to allow Wind Mobile to take part in the Canadian market because the other players in the market have to follow the current rules, so the Orascom Telecom-backed company should as well. This is the view outlined in an editorial piece in yesterday's Globe & Mail.

As stated the last time DTW visited this dispute, more twists and turns seem likely. We will continue to watch developments with interest.

In the meantime, Mr. Sawiris has expressed an interest in participating in the telecoms market of another developed economy. TeleGeography reports that the Orascom Telecom Chairman is eyeing France's Bouygues Telecom. A tie-up with the French operator would make sense the said an anonymous Orascom official, adding: "It would reinforce our presence in the Mediterranean, improve our roaming possibilities, there would be many synergies." Watch this space. Will Egypt's Sawiris continue to make inroads into Europe's highly developed and competitive telecoms markets?

1 comment:

  1. Other exception..

    Tracfone Wireless, the largest MVNO in the USA with more than 10 MM users is owned by America Movil (Mexican Company).

    Very nice blog


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