Dictators gonna dictate
Turns out it’s really hard for foreign investors to make money in North Korea. Who could have guessed? Orascom tried anyway, apparently hoping to gain a foothold in a country of 26 million potential customers. The plucky Egyptian company is behind the astonishing explosion of cellphone usage in hermetically sealed North Korea in recent years.
After taking a 75-per-cent stake in a new joint venture in 2008, as many as three million North Koreans have signed up for “Koryolink” cellphone services, using rebranded Chinese flip or smart phones.
Although Orascom offered 3G service, there is no public Internet in North Korea. Still, the Koryolink service has given North Koreans, very few of whom had access to a landline let alone a mobile, a way to contact each other.
Orascom is the largest foreign investor in North Korea and also offered to fix up the Ryugyong hotel, the pyramid-shaped structure that had been looming incomplete over Pyongyang for years due to crooked elevator shafts. But it has re-
Egypt’s Orascom, founded by the Sawiris family, is the largest foreign investor in North Korea.
ceived very little in the way of thanks, or money, for its efforts.
For some time, there have been reports that North Korea was not allowing Orascom to repatriate its profits.
Now, Orascom has revealed that it has “deconsolidated” its stake in the joint venture, officially known as Cheo Tech- nology, making it an associate instead of a subsidiary. Basically, this means that it has lost control of the service, despite having a majority stake, reports Martyn Williams of the North Korea Tech blog.
This comes after Orascom discovered that North Korea was starting a competitor to Koryolink called Byol, and then began discussions about merging it with Koryolink, thus presumably extracting even more money from Orascom.
While the negotiations were ongoing, the issues made it difficult to treat the investment according to international and Egyptian accounting standards, Orascom said.
Orascom’s chief executive, Naguib Sawiris, tried to sound upbeat. “We are very proud of the success of our operation Koryolink,” he said in a statement.