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Tuesday, July 04, 2006

Egyptian Auction – Back to the Future for the Maktoum’s

I can’t believe that Etisalat (Emirates Telecom) has just bid (and won) US$2.89bn for the third Egyptian licence. As far as I can see the people behind Dubai, the Maktoum family are the main shareholders of Etisalat. I know that the family loves burning cash, after all they are the new sponsor of Arsenal, but US$2.89bn is a lot of money. I struggle to believe that they will see a return in a long, long time. However, people have been proved wrong several times before with the families investments.

The bar was set when Tecom Investments bid US$2.25bn for a 35% Stake in Tunisie Telecom, the state PTT for Tunisia, outbidding the mighty France Telecom. Again, Tecom Investments is controlled by Dubai Holding and Dubai seems to be controlled by the Maktoum’s.

Next the circus moves on to Algerie Telecom and it wouldn’t surprise me in the slightest if the Maktoum’s outbid France Telecom again.

Everything about Dubai and Maktoums smells to me like they are modeling themselves on the founder of Singapore, Lee Kuan Yew and his family. They developed Singapore as a trading hub. They also have multiple parastatals in Temasek and Singtel investing overseas in telecoms. They were even outbid in Pakistan by yes, you guessed it, who then spent months renegotiating the deal.