The dispute, which will be heard in the International Court of Arbitration in Paris, was surprising because Orascom Telecom and France Telecom's partnership in Mobinil has been highly successful, according to Walaa Hazem, co-head of research at HC Securities.
“It was a surprise,” he says. “It has simply come out of the blue but I do not know the details.”
Orascom Telecom has filed multiple claims against France Telecom, and the Paris firm has responded with several counter-claims. The court does not disclose the details of any of its cases.
Although Mobinil accounted for 15 per cent of Orascom Telecom's revenues in the third quarter, the Egyptian operator is among Orascom's prize assets because it has grown quickly over the past 12 months.
Mobinil's revenues for the three months to the end of September are up 29.4 per cent compared with a year ago, while its customer numbers have risen by 69.3 per cent.
Telecoms consultant Analysys predicts Egyptian revenues will grow faster than in any other country in the region over the next five years.
News of the dispute with France Telecom comes just days after Orascom pulled out of Iraq by selling the assets of its Iraqna subsidiary to Zain. Orascom had announced a joint venture with Kurdish operator Korek Telecom in September, but that deal failed to materialise.
The Egyptian operator needed to partner with Korek to continue operating in Iraq after it lost its mobile phone licence in the country in August. Orascom pulled out of bidding for a licence when the price reached $1.25bn, claiming it was too expensive to achieve its targeted rate of return.
“Definitely it is a setback and - Orascom Telecom needs to plug the 12-13 per cent gap in the firm's revenues,” says Hazem. “It will look for a new investment [and] will be looking for investments in Asia.”