Orascom Favors Hutchison Telecoms Dividend

BARCELONA -(Dow Jones)- Orascom Telecom Holding believes Hong Kong-based Hutchison Telecommunications International should consider paying a dividend to shareholders following the sale of its Hutchison Essar unit, Orascom Chairman Naguib Sawiris said Wednesday.

Orascom, which also had expressed interest in buying Hutchison Essar, owns a 19% stake in Hutchison Telecommunications. Earlier this week, the UK's Vodafone Group agreed to buy the controlling Hutchison Essar stake from Hutchison Telecommunications for more than $11 billion in cash.

"I think a dividend should be considered," Sawiris said. In addition, "I think there should be enough capital left in Hutchison Telecommunications. Basically, it needs to be a good balance" between the interest of the company and its shareholders.

Sawiris said that he was "disappointed" that he didn't manage to acquire Hutchison Essar. But he said the price paid by Vodafone - putting Hutchison Essar's enterprise value at close to $20 billion - would simply be "too dilutive" for Orascom.

"Vodafone paid 19 times EBITDA," the Egyptian telecoms mogul said, referring to Hutchison Essar's earnings before interest, taxes, depreciation and amortization. "We trade at like six times EBITDA, so that is why it would have been too dilutive."

Sawiris added that Orascom, the Middle East's largest telecommunications operator by market capitalization, isn't interested in buying Vodafone's minority stake in Indian telecoms giant Bharti Airtel.

Instead of buying Hutchison Essar, Sawiris' telecoms investment vehicle Weather Investments agreed last week to buy Greece's TIM Hellas Telecommunications for an enterprise value of EUR3.4 billion.

Sawiris and his family own 97% of Weather Investments.

Sawiris reiterated that following the TIM Hellas acquisition, his management team will focus in the coming 6 to 9 months on integration and that no large acquisitions will take place during this period.

Still, the chairman insisted that it isn't a question of lack of resources or financial flexibility.

Before the TIM Hellas deal, financial analysts' had put Sawiris' war chest - including the ability to incur additional debt - at $3 billion.

"And now it's $5 billion," Sawiris jokingly said, without explaining how he arrives at that figure. "Practically, our net debt is zero." The chairman promised that he won't breach his commitment not to leverage the balance sheet beyond two times EBITDA.

Looking further out, the telecoms entrepreneur said that one of the markets he is interested in is North Korea because "it is still a very undeveloped market."

"I think yesterday's announcement that they will hold off on their nuclear plans is very positive," Sawiris said, adding though that "it is too soon to talk" more concretely about starting telecoms services in that market.

In terms of further European expansion, Sawiris said his interest remains centered around the Mediterranean, and he won't move further north.

Sawiris said there is no master plan in the works for merging Orascom with Weather at some point. Pointing to existing management and procurement collaborations between his two vehicles, he said: "We are already using all the synergies that can be used, so there is no need for that."

Company Web site: http://www.otelecom.com

-By Joon Knapen, Dow Jones Newswires; +49-30-28884127; joon.knapen@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 14th February 2007