Orascom Telecom Media and Technology Holding (OTMT) went into North Korea with plans to make a fortune from offering mobile communications to North Korea’s 25 million people.
The dream succeeded and the Egyptian company became the largest foreign investor in North Korea. Millions of North Koreans started using the services of Koryolink which was set up as a subsidiary of OTMT.
Yet, despite the initial smooth success, OTMT and its subsidiary quickly found themselves in trouble. According to a recent Washington Post report, North Korea has moved to nationalize Koryolink by setting up a competitor, Byol, which would then merge with Koryolink. Byol, according to the report, would own a majority of the shares in Koryolink, effectively handing over control of the company’s operations to North Korea.
Ahead of the report, OTMT had decided to deconsolidate Koryolink, making it an associate instead of a subsidiary. The Washington Post reports that this came not only after the steps taken to nationalize Koryolink, but after the company has found itself hundreds of millions short of the profit it earned. As a result of the government’s regulations on foreign exchange rates, OTMT’s Koryolink has reportedly made a profit of $US 8 million instead of $US 540 million.
However, OTMT has since denied that its subsidiary Koryolink is facing nationalization by the North Korean government, according to CBC.
“We are very proud of the success of our operation [in North Korea],” said Naguib Sawiris, OTMT’s Executive Chariman and CEO, in a statement according to The Enterprise.
“We have around three million people today carrying our phones in the Democratic People’s Republic of Korea. We are still hopeful that we will be able to resolve all pending issues to continue this successful journey.”
Meanwhile, Daily News Egypt similarly quoted OTMTs Marwan Hussein, the Chief of Investor Relations, as reiterating that there has not yet been any merger between Koryolink and Byol.
Is the North Korean ‘dream’ over for OTMT? That remains to be seen with the company reassuring investors that the issues will be resolved.