Companies & Industries

Egypt's Telecom Mogul Embraces Uprising


Most Egyptian businessmen are keeping low profiles these days. The protesters in Cairo's Tahrir Square blame them for Egypt's ills, and mobs have even trashed some of their properties. Yet Egypt's most prominent mogul, Naguib Sawiris, chairman of Orascom Telecom Holding, the Middle East's biggest telecom company, is in Cairo fielding calls on his mobile phone, appearing on TV, and (as a member of an informal committee of "wise men") negotiating with newly appointed Vice-President Omar Suleiman about a gradual transfer of power away from President Hosni Mubarak. Far from discouraged, the billionaire thinks a more vibrant Egyptian economy may emerge from the turmoil. "We will pull out [of the current crisis], I promise you," he says. "The fact that a family like mine did not leave is a good sign."

Some Cairo protesters have spoken ill of Sawiris, and looters have vandalized the shops, including an HSBC (HBC) branch, on the ground floor of his massive Nile City Towers complex. Yet he's been lucky so far. Unlike many Egyptian businessmen who rushed to serve in Mubarak's National Democratic Party or sought ties to the President's son, Gamal, the tart-tongued Sawiris isn't known publicly as a close ally of the regime. Before the crisis, he spoke openly about Egypt's ills and helped bankroll an independent newspaper, Al-Masry al-Youm. "He has maintained his distance from the ruling Establishment, not alienating them but not courting them," says Khaled Fahmy, a professor of history at the American University in Cairo.

Sawiris has over the past two decades built a mobile telecom business with 103 million subscribers and $3.1 billion in revenues for the first three quarters of 2010, and long invested in such fractious locales as Iraq, Algeria, and even North Korea. His telecom operation is currently in a jam, saddled with $15 billion in debt from previous acquisitions and expansions and locked in an expensive tax dispute with Algeria. In October, Sawiris reached a $6.5 billion agreement to merge much of his telecom holdings with Russian cellular operator VimpelCom (VIP). He says the sale, which does not include his Egyptian mobile holdings, is not affected by the turmoil in Egypt.

The Sawiris family, which includes two other brothers, Nassef and Samih, also controls the Mideast's largest publicly traded construction company and such resorts as El Gouna on the Red Sea coast. Naguib's children are staying there during the unrest.

Sawiris is optimistic about the post-Mubarak era. Investors, he says, should view a democratic Egypt as an opportunity. Better to do business relying on the rule of law rather than the whims of an autocratic government, he reasons. "Investment will go up," he says. "I am ready to put more money in."

Egypt's economic growth is almost certain to be slashed in the short run. The country's borrowing costs have risen and its reputation as a tourism destination has been damaged by TV images of mass demonstrations and chaos. Nonetheless, says Mustafa Abdel-Wadood, an Egyptian national who is a managing director of Dubai-based private equity firm Abraaj Capital, "the core thesis for Egypt still holds." The attractions: a large youthful populace with increasing spending power, and growing revenues from exports of natural resources, particularly oil and gas.

A regime change, if it occurs smoothly, will remove a key source of worry for global investors. Now, "in an ideal scenario, you have a more solid foundation for future growth," Abdel-Wadood says. Another scenario Sawiris says is possible: An Islamic regime comes to power and takes Egypt in an anti-democratic direction. "We need to prevent the kidnapping of the revolution by the fundamentalist movement, like an Iranian- style government," says Sawiris, a member of the Coptic Christian minority.

So far, Egypt remains open for business. Oil and gas production have not been disrupted and drilling, which was temporarily halted, is resuming, says Frank Chapman, chief executive officer of British energy company BG Group, which with partners has invested $10 billion in Egyptian gas projects. Whatever new government takes over "will want to see a continuation of the contribution companies like BG are making" to the economy, he says.

Even Egyptian businessmen, whose ostentatious wealth caused resentment in a nation where per capita income is about $2,500 a year, are now open to reform. Yasser El Mallawany, co-CEO of Cairo-based investment bank EFG Hermes, says the new government needs to "take from the rich to give to the poor" to support small and midsize enterprises that create jobs. Sawiris agrees more is needed to help spread prosperity. "We need a Marshall Plan here," he says. "If Egypt turns into an Iran, it is a disaster."

The bottom line: Naguib Sawiris, chairman of the Middle East's largest telecom company, believes Egypt's turmoil may foster a better business climate.

Stanley_reed
Reed is a reporter-at-large for Bloomberg News and Bloomberg Businessweek.

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