Orascom to Hold Further Investments in Pakistan

Posted by: Aamir Attaa on November 18, 2008 at 5:15 PM

We have been seeing Mobilink losing customers in recent months, hence the revenues too, resultantly; the impact can be felt on overall performance of Orascom, the parent company of Mobilink.

Recently, Orascom Telecom (OTH) reported its 3rd quarter, 2008 profit of US$ 90.5 million - down by 28% compared to same period last year – while revenues reached US$1.37 billion in Q3 2008. Mobilink’s subscribers reached 31,359,049 mark out of 79,267,452 Orascom subscribers in 6 regions.

Mobilink reported ARPU of 2.9 $, lesser as compared to 3.9 $, same period last year. The decrease in ARPU in Pakistan is mainly due to the decreasing value of Pakistani Rupee against the US Dollar as well as rising inflation and an increase in sales tax which has further impacted consumers’ spends.

Orascom’s third quarter 2008 earnings release can be downloaded from here (PDF file) Size:179 KB

Naguib Sawiris, Chairman and CEO of OTH, pointed out Mobilink’s role in these financial stats by saying: “Most of our businesses, with the exception of Pakistan, continue to perform on target in terms of growth and profitability. In Pakistan the political, security, financial and economic conditions have been very difficult and we will continue to monitor closely developments in this market, as we will to a lesser extent in Bangladesh, so as to adequately size our future investments,”

Orascom’s hold on investment in Pakistan was hinted on another occasion when In his Bloomberg interview, Naguib Sawiris admitted his worries about the impact of the credit crisis on telecoms – he also admitted for the first time that Orascom may consider holding further investments or even put up shares for sale as well. Mr. Sawiris is known for tending to be more open than other telecom executives and this statement might be one of such moments.

Recent news items reported about sale of 26 percent Mobilink’s shares also seems valid. By the way, in a recent development, Orascom Telecom and Telecom Egypt have confirmed to liquidate their landline joint venture in Algeria, Algérie Télécom.

Stated situation is not favorable at all for Pakistan’s telecom market, which may result into lesser FDI, layoffs or even both. In order to smoothen situation, Pakistan Telecommunication Authority must sense the intensity, and should play its role in order facilitate cellular companies – first thing they can do is to lower government taxes on Telecom services.

I am wondering how Mobilink’s will respond to 3G network rollout call, in this scenario!

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Tags: FDI, Industry, Investment, Mobilink, orascom, Telecom

Category: Featured, Government, Industry, Investment, Mobilink, World, cellular, economy

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