Orascom Telecom Holdings has paid HKD $10.1bn ($1.3bn) for a 19.3% interest in Hutchison Telecommunications International Ltd in what the two companies see as a powerful alliance offering mobile telecommunications to the developing world.
While the two companies currently serve 40 million subscribers, they control mobile operators in 15 countries representing a licensed area covering roughly 2 billion people, a third of the world’s population.
Cairo, Egypt-based Orascom has ambitions to emulate Vodafone by becoming a global operation. While the western carriers operate in saturated mobile markets, Orascom and Hutchison have licenses in countries where penetration is low and this offer enormous growth potential.
Orascom bought the holding from Hong Kong-based conglomerate Hutchison Whampoa Limited (HWL) in what is shaping up to be a close alliance between the two companies.
They have agreed a standstill period of two years in which neither party will be able to sell any of its stake in Hutchison Telecom and subsequently the right of first refusal for both parties on any share sale.
Orascom CEO Naguib Sawiris and colleague Aldo Mareuse will join the Hutchison Telecommunications board.
The two companies are to align their respective procurement processes to exploit synergies in relation to equipment purchases and international roaming and transmission costs.
In a statement, they said there is no overlap in the markets where they operate, and combined geographic footprint includes important adjacent markets such as Orascom Telecom’s operations in Pakistan and Bangladesh and Hutchison Telecom’s operations in India and Sri Lanka.