EGYPT'S ORASCOM SET TO ACQUIRE MALYSIAN STAKE IN BANGLADESHI OPERATOR

Mergers, Acquisitions and Financial Results

Egyptian telecom giant Orascom is set to purchase through a hush-hush deal the Malaysian stakes in Sheba Telecom, a mobile phone operator which has failed to tap the business potentials in Bangladesh mainly due to a chronic feud between its Malaysian and Bangladeshi partners.

The agreement with Egyptian Orascom involving USD25 million was finalised in secret one week ago, Sheba sources said, adding the pact has been kept secret for legal reasons, considering financial fallout and because of the feud.

The main reason for the undercover dealing is that the existing joint venture agreement between the Bangladeshi and the Malaysian partners dictates that if any party sells its Sheba shares, the other party will enjoy the first right to buy that.

Sources said Integrated Services Ltd (ISL), the Bangladeshi partner, is now being 'officially' shown as purchasing the shares held by Technology Resources Industries (TRI) of Malaysia for USD15 million. ISL will pay another USD10 million to Standard Chartered Bank to settle Sheba's liabilities.

While top official of Sheba insisted that ISL is purchasing the TRI stakes, competent sources in the company confirmed Orascom's involvement, which will later shown as buying the Malaysian stakes from the ISL.

Baker Mackenzie, a US company dealing with antitrust and trade-banking-finance-corporate dispute resolution, visited Sheba last week for auditing. Rahman Rahman and Huq, a chartered accounting firm of Bangladesh, is working as a co-auditor.

Sheba sources said they are expecting a new management in a month or two. Sheba is the smallest of the country's four cellphone operators with 195 staffs.

Although the Malaysia-Bangladesh joint venture had high potentials when it obtained licence in 1996 and launched operation in the last quarter of 1997, the relationship between the two parties turned bitter from the beginning. As a result, when companies like GrameenPhone exceeded a client base of one million, Sheba could create a base of only 59,000 users, of whom 49,000 are regular. Only 28,000 Sheba cellphone service users were recorded to be active last week.

Daily Star