May 4, 2008 / 11:20 AM / 11 years ago

Syria's top cellphone firm posts 29 pct profit rise

DAMASCUS, May 4 (Reuters) - Net profit at Syria’s largest mobile phone operator Syriatel rose 29 percent in 2007 to 6.67 billion Syrian pounds ($150.2 million) compared to the year earlier, according to annual results published on Sunday.

An increase in customers and an expansion of services were behind the improvement, said Syriatel, which is negotiating to be taken over by Turkish counterpart Turkcell (TCELL.IS)(TKC.N).

Revenue rose 24 percent over the same period to 39.4 billion pounds ($856.5 million) and subscribers rose 33 percent to 3.34 million, comprising 55 percent of the Syrian market.

Network Capacity rose by 1.4 million lines to 4.7 million and infrastructure for an advanced 3G broadband Internet service was set up but the lack of government approval has delayed full launch of the service, the company said.

“The service will increase our customers and solve the Internet bottleneck problems of Syria,” Syriatel said in an advert in local newspapers.

Syriatel is at least 69 percent owned by Rami Makhlouf, who is the target of U.S. sanctions imposed on him in February as part of a U.S.-led campaign to isolate the Baath Party-led government in Damascus.

Gulf shareholders own a minority share of Syriatel, which has a 10 percent stake in a Yemeni mobile operator with 120,000 subscribers.

Makhlouf, the cousin of President Bashar al-Assad and Syriatel’s chairman, is negotiating to sell most of his share to Turkcell for an estimated price of around $1 billion.

Diplomats and financiers told Reuters this week that he United States was putting pressure on Turkcell to abandon the takover.

The U.S.Treasury Department has warned American investors in Turkcell, which is listed in Istanbul and New York, about the company’s plan to buy Syriatel, they said.

Turkcell denied on Thursday there was U.S. pressure on the company to scrap the deal and said that the talks with Syriatel were continuing. Turkcell had expected the negotiations to conclude in March.

The Treasury Department has designated Makhlouf “a regime insider whom improperly benefits from and aids the public corruption of Syrian regime officials.” The move was made under an expansion of the sanctions announced in an executive order by President George W. Bush on Feb. 13.

The order freezes any assets Makhlouf holds under U.S. jurisdiction and forbids American citizens or entities from doing business with him. Makhlouf, 39, has denied the U.S. charges. He said he did not have assets in the United States and his businesses were legitimate.

Reporting by Khaled Yacoub Oweis, Editing by Richard Hubbard

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