Face Time with Naguib Sawiris

(CNN) -- Deal-making clearly runs in the Sawiris family. All three sons have followed in the footsteps of their father, the founding patriarch of the Orascom Group, Onis Sawiris.

The eldest son, Naguib Sawiris, is arguably the most successful with an estimated fortune of $10 billion.

A rash of deals this year saw Naguib jump more than two hundred places up Forbes' 2007 Rich List, from 278 to 62.

He's third on Forbes' list of richest men in the Middle East, five places ahead of his father.

Naguib Sawiris is a self-confessed fighter, "righteous and defiant", who's not afraid of risk.

As Chairman and CEO of Orascom Telecom, he's taken the company beyond the home market of Egypt to Algeria, Pakistan, Tunisia, Iraq and Bangladesh.

He's also made high-profile deals in Greece and Italy, and was recently reported to be interested in moving into the French telecoms industry.

MME's John Defterios spoke to Naguib Sawiris and asked him whether Orascom Telecom's recent divestments -- of its Iraqi mobile company Iraqna, and a stake in Hutchinson Telecommunications -- were a prelude to the sale of the entire group.

Naguib Sawiris (NS): On the contrary, if you sell off a side you have a cash machine and a war chest, you don't sell the company.

John Defterios (JD): You have some two billion dollars more money in the coffers right now, what is the best way to redeploy those assets in your opinion as you see today?

(NS): Well, I think that everybody's recognized that we're building up a war chest, and it's more than $2 billion. I think what we trying to find now is a target we can acquire without a price war and destroying shareholder's values. I think next quarter or two will see some movement from our side. We can't really disclose our plans now as you know all our neighbors here are full of cash, driving prices up so we will volunteer by giving them our targets.

(JD): Indeed, but does it make it more difficult now that competitors have more cash and are willing to spend?

(NS): Yes of course, it drives the prices higher and you've seen the recent licenses in Egypt go for $3 billion, in Saudi Arabia $6 billion. We're seeing some acquisitions from regional players, which don't make sense in our opinion, for very high prices, even in India it's considered to be on the high side at $19 billion. So we're seeing prices going up and we will not imitate that, if I may say.

(JD): In fact, you changed your strategy as a result. You have your five core markets and are selling assets in sub-Saharan Africa. How do your change your strategy to respond to this capital?

(NS): One was sold because of my risk assessment of Iraq, and I don't think putting an extra $1.25 billion in Iraq is a sensible thing to do just to stay in there. The value we created was not higher than the value we sold at and so it was not really justified, and that's why we sold. We felt we were not moving with the 21st century and after the sale of India it became less attractive.

(JD): Do you want to go back into India, this market has 14% penetration and is doubling every year. What are your thoughts on India?

(NS): I think in India we go back indirectly through someone who is already there, but we don't believe in any new entries there or anywhere else in the world.

(JD): In fact are you looking at a partner in that market already as a result of the growth?

(NS): I think so, we are looking at someone who is a player there and I think it's more than there; it's someone who's regional. I think the potential's there to go and directly acquire a Greenfield in India. We can't go in there and go and compete against Reliance, it's just too late.

(JD): Let's talk about some of the other 'BRIC' countries -- Brazil, Russia, India and China -- specifically China. Does Orascom need to have a strategy for that very large market?

(NS): Well, as you know very well, the Chinese have not really opened their markets, and we've been shouting and screaming and saying that it's not fair, that they're not opening their markets while they're trying to go everywhere. So we're trying to find a way to get into China, and we think we've found a way. It's not what we would hope to have, but I think it might be, we might have found a way to get in.

(JD): This is not the first time we've talked together. In fact, I've followed you for the last four or five years, and I look at markets in Asia like Vietnam and Cambodia, and they seem to have the traits of Orascom. Are these markets that seem interesting to you in the future?

(NS): When you have Cambodia with six players already, we are not going to get a seventh in a country with less than 10 million people. These are all things which will decorate the company, but which will not create value. I am looking for something where I can go in and make a difference and create immense value, just like we did with Iraq and even add to it.

(JD): How about Cambodia?

(NS): I just said they have six players already.

(JD): And Vietnam, is it as attractive as some of the other markets you have gone into in the past?

(NS): Well, it's quite attractive, but like Cambodia, six players already and not many licenses, and I'm not at that point in my life where I want difficult complicated situations, I want to go into something that's a sure thing.

(JD): In fact your brother Nassef has gone into North Korea with a quite sizeable investment; this is a market that's not really tapped to date but a play for the future. What do you think of that market?

(NS): Well, I actually introduced him to that country, as I am already negotiating in the mobile license. We have seen some positive signs from the North Koreans. They seem to be peace-loving, and they see that dismantling their nuclear things is a positive thing and should be greeted by us and by everybody. We believe that they are market which is untapped. They don't even have enough fixed lines, so imagine if you are the first mobile operator. We are currently in a joint venture with the local company there, to provide expansion on the fixed line and we are quite sure that 2008 will see will the surprise of us becoming the first mobile operator in North Korea.

(JD): It's interesting the strategy of the Sawiris family, and that is with the deal with Lafarge, for the construction and cement group. Could you see a case where you pick up a large European customer or partner in the future, and you take a stake in that group, and it gives you much bigger global clout?

(NS): Yes I could see that, but, no I have to tell you something about the Sawiris family. The Sawiris brothers are completely different, each brother is very different. People who know us know that I am very different from my younger brother, so most probably if I ever do a deal like that, I would like more than 11 percent for sure, and I would like to have a say in the company. But frankly speaking, between you and me, I prefer to be the acquirer than to be acquired. But we will see what time will bring. It is a fact now that telecom operations are becoming scarce and you can't really grow any bigger unless you really join someone, so we are leaving all the options open you know.

(JD): If I listen to you carefully, you have a customer base of better than 70 million customers right now and the market's getting a little bit saturated with players who have a lot of cash. So why not celebrate now? This could be the top of the market.

(NS): Telecom is in my blood, if I ever do something I will remain in telecom. I will never exit, I do not need the money, my family, and we don't really need just the money. I like to work, and I like my work and I like the telecom business. And by the way, we have actually 90 million subscribers if I add Italy and Greece. 70 million is just Orascom Telecom.

(JD): When one thinks of a partner for you they think of the major telecom operators like Vodafone or France Telecom. How about a private equity partner that wants to take you on a much bigger global scale? Is that an option?

(NS): I think with the current debt situation, private equity has a lower voice today, but we are always looking to private equity for a smaller stake. But frankly, private equity will not match my ambitions. My ambition is to become one of the major players. So, as you correctly said, at a certain time and point we will be looking at who should be our partner to grow further. But as I said, I would only do it if I had a real say in the company.

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