Orascom back in the black

Orascom beat expectations by returning to profit

Egyptian communication group Orascom Telecom (OT), one of the biggest operators in the Middle East and Africa, has defied expectations with a turnaround in first quarter profits.

Orascom Telecom has grown aggressively in the past four years, from a single network in Egypt to its current position of having licences in 21 countries.

Its rapid expansion had caused concern over how it would fund such acquisitions, but it appeased the market on Thursday by confirming it would sell some of its smaller subsidiaries.

OT also reported a profit for the first quarter of 2002 of 3.1m Egyptian pounds (£433,000) against a loss of 32.8m Egyptian pounds in the same period last year.

A welcome turnaround

Analysts welcomed news of OT's profits, seeing it as evidence of a successful restructuring.

OT - part of Orascom Group, one of Egypt's largest conglomerates - has said it will sell some of its smaller companies which are growing more slowly than other divisions, including sub-Saharan groupTelecel.

The company is also seeking to move some of its short-term debt to a long-term basis.

"The completion of these steps will provide sufficient funding to stabilise the financial situation of the company in the forseeable future," the firm said.

Raising funds

Analysts said they were still waiting to see further progress on the sale of Telecel.

The unit raised $40m in June by selling a 52.5% stake in Ivory Coast Telecel Loteny to Telecom Mauritius.

"The first quarter results reflect OT's revised strategy of value generation to its shareholders," OT chairman Naguib Sawiris said.

Turnover in the first quarter rose over 50% to 1.15bn Egyptian pounds against 757.4m for the same period in 2001.