Egyptian billionaire Naguib Sawiris knows a thing or two about operating among strongmen in their dictatorships
When tyrannies teeter to people power, as we are witnessing in Egypt and beyond, the cronies and rentiers who got rich from their cosiness to authority usually cut their losses and run for their lives and the remains of their Croesan piles.
So as Cairo burns, it is reasonable to expect that Egypt’s richest man, the mobile mogul Naquib Sawiris, might be thinking Switzerland looks particularly agreeable at this time of year and, indeed, for the rest of his life.
Except that as the flames rose at home, the 55 year-old Sawiris instinctively decided it was a savvier business idea to fly towards them than to flee, unlike many of his fellow tycoons. “This is an opportunity,” he said. “I’m a democrat at heart.” As for Mubarak’s decree to take Sawiris’s MobiNil operation offline during the current demonstrations, he said it was “stupid.”
I spoke to Sawiris a month ago at length in his immaculate art deco-themed eyrie by the Nile, as anger seethed on the streets after sham parliamentary elections. He was hardly complimentary of the regime that had helped make him a billionaire. Sawiris thought Egypt had been trashed under Mubarak. He railed against its corruption and cronies, the massive state ownership of Egypt’s economy – up to 70 per cent – and the surfeit of “leftists and Nasserists still in the regime … the anti-business sentiment here”. In what looks now to be almost a prophecy he said that “all these problems can’t be compared to the big question, of what will happen when the President is not here. That’s the million-dollar question.”
A Coptic Christian who made his riches in the heartland of Islamic scholarship, Sawiris knows a thing or two about operating among strongmen in their dictatorships. As Egypt began its historic revolt last week, he was schmoozing with ”Dear Leader” Kim Jong-il in North Korea, where Sawiris’s Orascom Telecom is that regime’s biggest – if not only – foreign investor. In Robert Mugabe’s Zimbabwe, where his Leo mobile phone service is a market leader, his business partner is believed to be Mugabe’s nephew. Sawiris has owned the biggest telco in Algeria for near a decade, but now fends off attempts by the military regime to seize his $US10 billion operation there. Apart from its native Egypt, Orascom is a market leader in markets that can only be described as challenging, and rarely democratic; Pakistan, Bangladesh, Burundi, the Central African Republic and Namibia. But, chameleon-like, he can be pluralist when it suits, owning operators in Italy, Canada and, until recently, Greece.
But he is also skilled at angling the each-way bet. Though he is installing North Korea’s first mobile service, his family also builds military bases for the Kims’ mortal enemy, the US, in Afghanistan and Iraq. His family renovated the air base in Cairo’s west where the young Hosni Mubarak was base commander before assuming the presidency, which earned brownie points at the presidential Heliopolis Palace. Now, Sawiris’s general counsel at Orascom is the nephew of the man Mubarak appointed this week to succeed him, the Vice-President and intelligence chief, Omar Suleiman. When media predicted the end of his Egyptian empire this week, he went on the front foot to insist this was a beginning.
It was in US-occupied Iraq where Sawiris says he did his best deal.
“Our story is that we always go into difficult places,” he says. “We always try to get the licence as cheap as possible,” as he famously did in Iraq, turning a $5 million contract for the Baghdad environs issued by the US occupying authority in 2003 into a $US1.2 billion sale in 2007 to a Kuwaiti operator. “Two hundred thousand per cent!” he says, with evident satisfaction.
His timing can be impeccable. He was a leading mobile operator in Tunisia until January 5, when he closed a $US1.2 billion sale to a joint venture of Qatar’s QTel and the son-in-law of the then president, Zine El Abidine Ben Ali. A week later Ben Ali and his grasping family had been hounded from rule. In November he laboured under short-term debts of €12 billion ($16.4 billion) at his Italian operation, Wind, that threatened his entire empire. By early December he had managed to get them rescheduled in record time. Had it been delayed a week, the euro’s Irish wobbles may well have taken him out.
Now Sawiris is trying to sell his life’s work to a Russian oligarch, Mikhail Fridman, who is tight with Vladimir Putin. He has struck a deal to pocket about $US2 billion and get 20 per cent of the merged Vimpelcom group, which will be the world’s fifth biggest telecom. North Korea and Egypt will be kept outside the deal.
At $US6.6 billion, the Russian deal seems cheap. His Italian operation is worth at least that. The stymied Algerian operation is worth $US10 billion on paper, and the Orascom rump is perhaps another $US3 billion. Orascom is a classic example of a company where the sum of the parts is greater than the whole. His chief financial officer complains that the market ”doesn’t understand” the group, in part because of the disparate places it does business.
Like North Korea, where the value of the Koryolink venture with the Kims “is either zero, or $US5 billion. If there is reunification, then I will be the incumbent of North Korea, and my value will be something like [South Korean carriers] SK Telecom or Korea Telecom.”
“If there is a war and they unify after the war, it is still the same, depending on who wins of course. And if they take the asset, then it is worth zero. There is no between value [in North Korea] because who will buy? No one else has the relationship that we are building there.”
For Sawiris, the North Korean play boils down to what financiers call a binary option; an all-or-nothing investment, rather like what Egypt could be if things turn badly there.