Orascom: How do you solve a problem like Korea?

Naguib Sawiris has built large parts of his empire by being prepared to do business where other companies would fear to tread. He explains how he became a telecoms operator, banker and even an hotelier in the biggest rogue state of all, North Korea.

“We looked at a map of the world and there were only three countries that did not have cellular service – Cuba, Burma and North Korea,” explains Sawiris.

“So I went to Cuba first and I couldn’t believe they were still believing in communism, so the trip was a failure. Then I went to Burma and met the minister of telecom, a general, and he told me to come back in three years. The three years elapsed and nothing happened.

“Someone told us he knew the North Korean ambassador in Geneva. So we went there and met him. A very nice man, and he said it will take time but it could happen, and we could start by doing this and that, and you have to visit and so on…

“So we went in 2008 and then suddenly the idea got momentum, they started to like the idea and we accepted some of the ideas they had. But it was a very difficult negotiation, we had some hiccups, they would change the rule.

“But now and with every visit the trust increases, I meet someone higher and we have proven to be just interested in doing our business there, we have met all their concerns security-wise.

Not so lonely: Jang Song Thaek, vice chairman of the National Defense Commission, Naguib Sawiris and Kim Jong Il

Not so lonely: Jang Song Thaek, vice chairman of the National Defense Commission, Naguib Sawiris and Kim Jong Il


“This will become one of the most successful stories of my life even if they take the company away because I have helped, as of this day, 400,000 North Koreans, for the first time in their life, have a phone to call their families in South Korea – they have international but it’s monitored.”

Given North Korea’s lack of credit cards, bank accounts and, indeed, banks (Sawiris also set up a bank, called Ora, in North Korea to facilitate the deal), Sawiris’s Koryolink service – a joint venture with Pyongyang’s post and telecoms ministry – is prepaid, and the handsets are expensive, costing around $1,000 for very basic services that the state peeks into. Sawiris has spent $100 million there so far, for a 25-year licence with a four-year exclusivity that ends in 2012. The agreement is denominated in euros, is held by the Sawiris private company and is kept away from bankers.

Sawiris describes his typical customer in North Korea: “He’s a high-net-worth individual who has a relative in South Korea sending him money, or he works in an industry, an engineer in a cement factory or something like that.”

He says Koryolink is being kept aside from the VimpelCom deal. But, hang on, aren’t the Russians historically close to the North Koreans, through the old socialist networks? “Nobody is as tight as much as I am,” he says. “It’s personal you know, I went drinking with these guys at night, we made jokes, we get along well, and I’ve done nice stuff there – I’ve repaired their tramways, I’ve recovered their hotel, donated medicine when they had the floods.” (The Ryugyong Hotel, designed to be the world’s tallest but unfinished for 20 years, has been a visible embarrassment for the Kim family in Pyongyang.)

For Sawiris, the North Korean play boils down to what financiers describe as a binary option: an all-or-nothing investment.

“The value is either zero or $5 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.

“Any state can take any business they want – take Algeria, why is that different? The only difference is that when I bid for Algeria it would never have occurred in my wildest dreams that they would do this.”

Investing $100 million to possibly make $5 billion is an excellent bet in any language. Sawiris agrees that it could be a good trade if it comes off, and it’s here – despite persistent protests that he’s not an asset trader – that one possibly detects a glimmer of the proverbial snaggle-toothed Middle East bazaar, albeit in an immaculate Art Deco office by the Nile. “But we will never beat Iraq… from $5 million to $1.2 billion,” he says with evident satisfaction. “200,000%!”

That this “240-bagger” – to coin an oft-used tech-era term – in Iraq was achieved in just four years and under the siege of war seems to make Sawiris’s oversized silver belt buckle gleam just that little brighter.