Egypt: telecom firm signs 1st deal in North Korea

The chairman of Orascom Telecom, the largest mobile phone company in the Middle East, arrived in North Korea yesterday Tuesday to sign a 25-year contract with the government to offer mobile phone services, making the Egyptian provider the first foreign telecom company to invest in the communist country.

The Cairo based phone company said in an official statement that it will spend $400 million on a third-generation network in the first four years. The company will hold exclusive rights in North Korea for four years.

"Orascom Telecom Holding celebrates today the inauguration of Koryolink ... the first 3G mobile network to operate in the Democratic People's Republic of Korea," the company said.

"This is not just about providing 3G mobile services," Sawiris was quoted as saying by the Korean Central News Agency. "We are making history in a country that is developing and opening up in a remarkable way."

OT won the reclusive communist state's first mobile licence in January, and said earlier this year it successfully tested its network and would start mobile services before the end of 2008, but many investors had expected the project to be delayed as the global financial crisis hit.

OT said it expected a couple of million subscribers for the unit, in which the North Korean government holds a 25 percent stake, in the first three or four years

The company has operations in Egypt, Algeria, Tunisia, Pakistan, Bangladesh, and Zimbabwe.

This is not just about providing 3G mobile services. We are making history in a country that is developing and opening up in a remarkable way

Naguib Sawiris, Orascom Telecom CEO

Can Orascom loosen up North Korea?

One of the world's most controlled societies, North Korea is a country with nuclear capabilities and 22 million people reliant on international aid. The Stalinist country has a basic mobile phone network since 2002 much less advanced than the one proposed by Orascom.

So far, it is not clear what restrictions or limitations will be imposed on the new network. The report by the Korean Central News Agency provided no details on the terms of service, the types of phones it might accommodate or who would be able to use it.

Andrei Lankov, an expert on North Korea at Kookmin University in Seoul, said that previous hopes that wireless networks would loosen the country's iron grip on its people had fallen short.

"North Korea doesn't want its people to talk too much between themselves," he was quoted by the Herald Tribune as saying.

"Government, party, military people are the big beneficiaries," Paik Hak Soon, an expert on North Korea at Sejong Institute in South Korea said, adding that only the privileged would most likely have access to the new advanced network.

The Orascom Cairo office told AlArabiya.net that Sawiris and a team of telecom professionals who launched the new venture yesterday are due to arrive to Cairo late Tuesday.