CAIRO-Egypt's Orascom Telecom swung to an unexpected net loss of $41.4 million in the second quarter of 2010, with revenues from its Algerian unit down from a year ago. The Cairo-based international mobile network operator said on Thursday its earnings before interest, taxation, depreciation and amortisation (EBITDA) was $441.3 million, and its revenue was $1.06 billion in the second quarter. The results were issued after Russian newspaper Kommersant reported telecoms group Vimpelcom Ltd might buy Italy's No.3 mobile operator Wind and 51 percent of Egypt's Orascom Telecom from tycoon Naguib Sawiris. Performance at Orascom's Algerian unit Djezzy, its main revenue earner, is expected to suffer under tightening regulatory pressure from the Algerian government, which also slapped the company with a $597 million back tax bill last year. Stung by the bill and other hurdles, Orascom tried to sell the unit to South Africa's MTN this year. But Algeria blocked the deal, citing a law it said gave it the right to buy the unit before any foreign bidder. Djezzy's total subscribers, its revenues and profits are likely to be watched more closely than at most of Orascom's far-flung operations, as the unit's performance could affect the price the Algerian government might pay for it. Orascom's share price implies a fair value of $2.2 billion for Djezzy, investment bank EFG-Hermes said in a research note on Wednesday, much lower than the $7.8 billion Orascom's Chairman Naguib Sawiris said MTN offered for the unit. "There is no doubt that if Djezzy is fairly valued, then OT (Orascom Telecom) would arguably be the cheapest telecom stock in emerging markets," the note said. The company, which has a presence in countries from Pakistan to Canada, made a $49 million profit in the first quarter of 2010 and a net loss of $46.4 million in the last quarter of 2009. Orascom does not fully incorporate the Wind-branded Globalive, a Canadian start-up which launched in December, but holds an indirect stake and minority voting rights.
