Naguib Sawiris, the billionaire scion of Egypt's most prominent business family, dove into the embers of post-invasion Iraq with a $5-million (U.S.) bid to offer cellphone service and rose from the ashes four years later to sell his network for $1.2-billion.
Mr. Sawiris has a gift for extracting profits from the world's most volatile telecom markets. His wireless company is the largest taxpayer in unstable Pakistan. He partnered with the dictatorship of North Korea to become the first cellphone provider in that country. And he operates in impoverished Bangladesh, where the monthly bill is around $2.50.
"We go where people don't dare to go," the executive chairman of Orascom Telecom Holding SAE and Weather Investments SpA told The Globe and Mail in an exclusive interview. "We're crazy, adventurous."
Which is why he now finds himself in Canada - a country with an investment climate he says is worse than the emerging markets in which he usually operates.
The outspoken industrialist was in Toronto to pay a visit to the offices of upstart wireless provider Wind Mobile, which he backs financially. His involvement with Wind has already ignited controversy by challenging Canada's restrictions on foreign ownership in the telecom sector. In a decision late last year, Industry Minister Tony Clement overturned a ruling by the federal telecommunications regulator that barred Wind from the Canadian market because of its foreign funding.
The landmark judgment allowed Wind to start offering cellphone service in Canada. If Mr. Sawiris's plans work out as he hopes, Wind will become a fourth pillar in the national wireless market, challenging the incumbents BCE Inc., Telus Corp. and Rogers Communications Inc. As government debates the ownership restrictions, Canada's telecom sector, which until Wind's appearance had largely been closed to international investors, now seems ripe for an injection of more foreign capital.
In the eyes of Wind's critics, the firm is just another pawn in Mr. Sawiris's global chess game. He has made no secret of his belief that telecommunications around the globe will inevitably be dominated by just a handful of giant firms. With Mr. Sawiris already in merger talks with Russian carrier VimpelCom Ltd. to create a sprawling telecom titan worth about $25-billion, his vision of an age of huge global providers seems near indeed.
Mr. Sawiris's vast telecom empire already serves 120 million subscribers, or about five times as many wireless customers as the combined total of Bell, Telus and Rogers. His networks span the Middle East, Southern Europe, South Asia and parts of Africa, including some of the most impoverished parts of the world, where cellphone subscribers generate only a few dollars a month.
But in the eyes of the global deal maker, Canada is the true telecom backwater. Mr. Sawiris said the Big Three Canadian telecom players are "a joke," and that he would never invest in them because they are "too big, too slow."
"I have been offered by two of them to buy me out at a very significant profit," Mr. Sawiris said. "But that means I'm a broker, not an industrialist. It's against my saga, against my history. I'm not the kind of guy who goes out for the money. It's about success. And this, I would consider it as a bribe."
Mr. Sawiris accused the domestic players of playing "unfairly" by denying Wind the roaming and wireless infrastructure-sharing agreements that are mandated by the Canadian Radio-television and Telecommunications Commission. (Executives at the entrenched telecom players say they respond to such requests in a timely manner.) He also compared the regulator to a referee "looking and approving" as a player gets hit below the belt, since pursuing regulatory action against the incumbents could take years.
The Egyptian billionaire said it's inevitable that Wind will acquire Canada's two other fledgling wireless firms, Mobilicity and Public Mobile, which he says have no hope against the incumbents. "They will be dead on arrival," Mr. Sawiris said. "Wind should be the consolidator of all the smaller players here. We are going to be open to that. We are not interested in smaller players that are only coming with cash, or the licenses they paid cash for. We want them to succeed and have some subscribers. Because we can't do the job alone."
Mr. Sawiris reserves some of his most vitriolic language for Canada's rules on foreign ownership in the telecom industry. After a meeting at a Chinese restaurant in Cairo, he decided to bankroll Anthony Lacavera, a Toronto entrepreneur, in his 2008 bid for wireless licenses spanning Canada's major urban areas. That venture eventually turned into Wind Mobile.
But Mr. Sawiris's financial support for Wind Mobile - he holds most of the company's debt as well as 65 per cent of its equity - ran afoul of CRTC rules, nearly sinking the whole project. He credits the Industry Minister for "doing the right thing" by overturning the CRTC's decision to bar Wind, but says Canada's desire to protect its domestic industry from foreign players is matched only by China.
"It was just something we did not expect to see in the modern ages of a country that is part of the WTO [World Trade Organization]and is supposed to be encouraging investment," Mr. Sawiris said.
Large incumbents like Telus have said the government's approval of Wind's application, with Orascom's financial backing, amounts to an approval of foreign ownership in the telecom sector.
"Clearly, Tony [Lacavera]is quite visible in the company," says Michael Hennessy, Telus's senior vice-president of government and regulatory affairs. But, he adds, it's clear that Mr. Sawiris is in control. "The party that controls the majority of the money controls the business. Because that's how business operates."
Mr. Hennessy says Wind is bringing no innovation to the marketplace, simply relying on the heft of Orascom's buying power to assure Wind has lower prices.
Even Mr. Hennessy, though, agrees that there is "more competition in the market" now, and that the best way to ensure "sustainable competition" is by removing the ownership restrictions. But he argues that the restrictions have to be lifted for everyone.
The federal government is currently reviewing how to do so. And Mr. Sawiris says that, when the government does, he will "definitely" invest more in Wind's Canadian operations, which now have about 120,000 subscribers.
A stable and eventually profitable foothold in Canada would be a major step forward for Mr. Sawiris as he goes about piecing together his global empire. What he isn't happy about at the moment is Orascom's situation in Algeria, where the government recently slapped the company with a $600-million tax penalty that continues to mystify analysts.
Orascom's Algerian assets account for nearly half of the company's enterprise value, one analyst said. But Algeria's increasingly nationalistic government became enraged when the Sawiris family sold its cement assets in the country to Lafarge, a multinational based in France - Algeria's former colonial ruler. Algeria then enacted legislation that gave the state the right of first refusal for any deal involving a firm's assets in the country.
Mr. Sawiris went ahead anyway and tried selling Orascom's Algerian division to South Africa's MTN Group Ltd. without consulting with the government. The deal collapsed, but it did result in a clear valuation for Orascom's Algerian division - a cool $7.8-billion. Mr. Sawiris can present that figure to Algeria's politicians the next time a merger deal is looming.
Which, of course, it is. Mr. Sawiris has long believed the telecom market will go through a period of global consolidation, at the end of which only five or six players will be left. To ensure he remains a player, Mr. Sawiris has taken on a huge amount of debt and gobbled up other telecom players, including a massive $15-billion leveraged buyout of Italy's Wind Telecomunicazioni.
An even bigger deal looms on the horizon as Mr. Sawiris's Weather Investments and VimpelCom, the giant Russian carrier, discuss a merger that would be a bold step on the road to global consolidation. "We are not only talking to them, we are talking to anybody," Mr. Sawiris told The Globe. "We have two things on our agenda right now - solving the Algerian issue and, second, finding a good partner for the group."
In Canada, the regulatory system and the established providers are not making Orascom's venture an easy task: Both Rogers and Bell have lowered prices and launched new unlimited services only in the markets where Wind operates. But Mr. Sawiris, though annoyed, is not easily daunted.
This is, after all, the entrepreneur who plunged into Iraq in 2003. "They kidnapped our people, two or three times," Mr. Sawiris said.
When he eventually sold his stake to pan-African giant Mobile Telecommunications Company KSC, it wasn't because of aggression from domestic competitors. He left Iraq, he says, because of an unstable regulatory situation - the same thing holding him back from funding Wind Mobile with all his might. "We were happy to leave," he said. "But we didn't leave because we were scared off."