London--Naguib Sawiris, chairman of Egypt's Orascom Telecom, said the political ambiguity that surrounds who will succeed President Hosni Mubarak is negatively affecting investment in Egypt. Sawiris also said that weak rule of law was deterring him from investing in emerging markets like Algeria, where Orascom's lucrative local unit is under pressure. Orascom has been stuck in a bitter dispute with Algerian authorities over its local telecoms subsidiary Djezzy since last year, threatening Orascom's cash flow and attempts by the Egyptian billionaire to sell his telecoms assets. Last year, the Algerian government served Djezzy a large back-tax bill, stopped it from transferring money out of the country, and blocked Orascom from selling the unit, its main source of revenue, to South Africa's MTN. "We ended up with a market share of over 70 percent of the telco--there are three players, we are the largest--and they started cracking on us for the mere reason we were too profitable and successful," Sawiris told the Economist Emerging Markets Summit. Sawiris is in talks to merge his holding company, Weather Investments, which owns just over half of Orascom as well as operators in Italy and Greece, with telecoms group Vimpelcom. But analysts say Algeria might again ruin any deal. Sawiris has a history of entering risky markets, including Zimbabwe, Iraq, and North Korea. "You must remember you are moving in a non-democratic environment... In no country can you invest without the blessing of the No. 1. If you can't get that, you should not be there," he said, referring to the Middle East and North Africa. Sawiris said Morocco, Jordan, and Egypt still look attractive, but added that the investment climate in his home market of Egypt has been tempered by uncertainty over who will succeed 82-year-old President Hosni Mubarak. "Your risk is the succession problem of our president. That's a risk. You need to take a bet on that," he said. "It is a big one, not a small one. But you know in a project that takes three to five, you need to make a judgment call," he said.
