With its pending IPO set to be one of the most exciting deals to come out of Egypt in recent years, Orascom Telecom is uniquely placed to realize its goals of becoming the Vodafone of Africa and the Middle East.

Over the past year, the company has acquired no fewer than 17 new mobile telephone licenses, and now holds a total of 19. Twelve of those are already on air and seven are set to be operational during the third quarter of this year. Those new licenses will include Benin, Gabon, Burkina Faso, Uganda, Yemen, the Democratic Republic of Congo, Chad.

Expanding Its Territory

Of the total number of licenses, eight are through Orascom Telecom in association with local companies in the various markets. Those include MobiNil in the home market of Egypt, in which it is in partnership with Motorola and France Telecom, Fastlink in Jordan, Mobilink in Pakistan, SyriaTel in Syria, MobiChad in Chad, Libertis in Congo Brazzaville, MobiCongo in the Democratic Republic of Congo, and SabaFon in Yemen. The remaining are through African GSM mobile operator Telecel, of which Orascom Telecom acquired 80% earlier this year for $413 million. They are in Benin, Burundi, Burkina Faso, Central Africa, Cote d'Ivoire, Gabon, Togo, Uganda, Zambia, and Zimbabwe. This was said to be the largest acquisition ever made by an Egyptian company.

In its home market, Orascom Telecom is the only company to have operations in all four kinds of telephone service. And while penetration there is currently low compared to markets like the US and some in Europe, only 1.5%, the potential is enormous. Studies have shown Egyptians to be ready, willing and increasingly able to spend a healthy portion of their low incomes on phone service when it becomes available.

"Until now, we have been running after the demand in Egypt," says Naguib Sawiris, chairman of Orascom Telecom. "Plus, prices have not gone down the way they currently are doing in Europe, and when they do, the potential will be enormous."

"Even with prices what they are now," he adds, "it has been a tremendous success."

Increased globalization of Egyptian businesses and continued liberalization of government economic policies will also feed demand for state-of-the art phone service, as will the growth of the developing middle class and increasing sophistication of the population, a full 39% of which is under 14 years of age.

Orascom Telecom, a division of the Orascom conglomerate founded 50 years ago by Sawiris' father, Onsi, also has a stake in Egypt's two largest ISPs, which together command a 60% market share. Spun off last year from Orascom Technologies, a company with a long history in information technology, Orascom Telecom is now present in markets whose total population is about 400 million potential telephone users and where penetration is among the worldís lowest. In Africa and the Middle East, GSM penetration is less than 0.5% while Africa's fixed line penetration is the lowest in the world, at 2%, compared to the world average of 6%. The company will not likely grow the business in each of those markets by 800% in two years the way it did with MobiNil in Egypt, but chairman Naguib Sawiris sees enormous potential in the telecom business all over the region, but in Africa in particular. Indeed, he wishes other industrial nations would likewise invest there.