Gov't to examine Egyptian firm's stake in Partner's parent company

Israeli mobile operator Partner Communications has a brand-new indirect shareholder: the Egyptian company Orascom.

Orascom, the largest mobile-phone operator in the Middle East, is buying a 19.3 percent stake in Hutchison Telecommunications International, which controls Partner.

Orascom is paying $1.3 billion for the stake in Hutchison, which owns 52 percent of Partner, which operates under the Orange brand name.

The Communications Ministry said it is studying the matter. There are certain restrictions in Partner's business license regarding ownership, and now this has to be looked into. Sources at various ministries say the license will be examined under a microscope.

Partner is one of Israel's biggest communications companies, serving 2.5 million users, or a third of the population.

The fuss around Bezeq's privatization demonstrates how sensitive an issue foreign ownership over Israeli communications companies has become. The Shin Bet security service was tightly involved in the privatization process, trying to ensure that foreign owners wouldn't cause any seepage of Israeli secrets or compromise state security. It therefore banned any of the major communications giants of the world from taking control of it. A representative of the Shin Bet sits on the Bezeq board.

Orascom and Hutchison will be cooperating on a range of activities including the procurement of network equipment, software, IT and roaming technology.

The Egyptian company has telecom infrastructure in eight countries with 460 million clients. Its market penetration rate is 11.5 percent of the globe. It had 25.5 million cellular customers as of September 2005.

Hutchison Telecommunications is a unit of Hong Kong-based Hutchison Whampoa, which belongs to billionaire Li Ka-Shing.

Orascom is chaired by Naguib Sawiris, 74. It started as a tiny construction company and is now an empire worth some $12 billion, controlled by three of his sons. It operates via three divisions: Orascom Telecom Holdings, Orascom Construction Industries and Orascom Hotels and Development.

Orascom Telecom Holdings was launched in 1998 as a partnership with the Egyptian telecoms giant Mobinil.

It expanded rapidly and bought operating licenses - sometimes for outrageously high prices - throughout the Middle East and Africa. It reached deployment in 22 countries but the telecoms bust and its own heavy debt forced it to sell some of its holdings.