Orascom’s bold move into North Korea in 2008, when it set up the country’s only mobile network, has turned into a major headache for the firm as it faces difficulties repatriating profits and has lost control of its 75 per cent-owned venture, Koryolink.
The Cairo-based firm, which has run mobile networks in more than 20 countries, including Bangladesh, Iraq and Yemen, has three million subscribers in the isolated country and posted a profit before tax and depreciation of $270 million in 2014, the Wall Street Journal reported.
Orascom stated in a November stock market filing it has written off the venture, estimated to be worth $832 million in June. It wasn’t able to transfer money out of the country last year because of local currency controls as well as international sanctions, the Journal said.
While Orascom CEO Naguib Sawiris told the newspaper it was “trying to negotiate a solution” and was considering a possible merger with state-owned Byol, the government has said Orascom wouldn’t have management control of the merged firm. This effectively means it has lost control of Koryolink’s activities, which account for the majority of Orascom’s revenue and profit after it sold off most of its assets in 2011 to Russia’s VimpelCom.