CAIRO, March 12 (Reuters) - Orascom Telecom, the fourth biggest Arab mobile phone operator by market value, will launch North Korea’s first mobile phone service in May, aiming to sign up 100,000 subscribers initially, the CEO said on Wednesday.
Egypt-based Orascom Telecom (OT) ORTE.CA ORTEq.L won the first mobile phone licence in North Korea in January. CEO Naguib Sawiris told a conference call with analysts that the service would start in three major cities in the reclusive communist state and the company would then assess the impact.
“We want to see first how fast we will sell that and what kind of ARPUs (average revenue per user) we are going to generate and how the system will be there. Will they allow everybody to take the line?” Sawiris said.
“The licence says all of that should happen. But we are opening up a country that was closed for centuries so we need to be quite cautious,” he added.
Sawiris said he was “astonished” how quickly the North Korean authorities wanted the service to start and he had high hopes for business in the country.
“We firmly believe that in the next three or four years we will be having a couple of million subscribers there and we will be seeing ARPUs in the range of $12 or $15 (a month),” he added.
Sawiris said that of the $400 million the company plans to invest in North Korea over the next three years, about $200 million would probably come in the first year, with $100 million in each of the two subsequent years.
Orascom Telecom is flush with cash after selling off its interests in Iraq for $920 million and shares in Hutchison Telecommunications International 2332.HK for $761 million.
Those one-off gains helped the company report a 180 percent rise in 2007 net income to $2.021 billion on Tuesday.
Sawiris said the company had hoped to gain access to the Chinese and Malaysian markets but the prospects in those countries did not now look good.
“The Chinese are adamant about blocking any foreign operators coming into China and they are not serious even about respecting the WTO agreements,” he said.
“Nobody is putting any pressure on them and they are closing the door,” he added.
Orascom Telecom has had talks with Telekom Malaysia (TLMM.KL) but it turned out that the Malaysians were looking for a financial investor, rather than a mobile operator for a deal that would make sense through synergies, he said.
But an independent OT subsidiary in Africa is in talks on acquiring three or four licences in the continent. Sawiris declined to say where they were.
The strategy for these African operations is that the target populations would have to be at least 5 million and the capital expenditure should not be enormous, he added.
“We have the appetite. We have the cash. If you guys hear of anything we can do, tell us, but frankly we don’t have anything on the screen outside what I have said now,” he said.
OT expects to use some of its cash to buy back shares from the market when it thinks the price is attractive, he added.
The company predicted that revenue and EBITDA (earnings before interest, tax, depreciation and amortisation) would grow by about 20 percent during 2008 and EDIBTA margins would stay steady. The margin in 2007 was 43.3 percent. (Writing by Jonathan Wright; editing by Elaine Hardcastle)