Orascom Telecom: Risks of Internationalization
(7 pages of text)
Orascom Telecom Holding S.A.E. (OTH) was established in 1998 in Egypt and grew to become a major player in the global telecommunications market. OTH was among the largest and most diversified network operators in the Middle East, Africa, and South Asia. Orascom Telecom Algeria (Djezzy) was launched in February 2002 and grew to become the market leader in Algeria in terms of both subscriber numbers and the quality of telecommunications services provided. Djezzy served more than 14.7 million subscribers on its network and had a 62.9 per cent market share.
Orascom wanted to further expand, and India was considered a great opportunity. In 2006, OTH agreed to acquire a 19.3 per cent stake in Hutchison to penetrate the Indian market. India was a promising market as there were strong complementary similarities between Orascom and Hutchinson Telecom. However, Orascom was not able to enter the market because it did not consider the expenses in an accurate way and ignored many factors. Now, in 2009, the treasury director of OTH was wondering what lessons in the risks of internationalization he could learn from the company’s failure in India and present difficulties in Algeria.
The purpose of this case is to help students understand the risks of internationalization and develop critical thinking in order to assess a business’s requirements for success. The case is used to assess the risks of internationalization in different contexts. Orascom Telecom Company witnessed two very different failures, in Algeria and India. However, there was something in common: both incidents reflected the risks of internationalization. With these two failures in mind, the purpose of this case is to develop an overall strategy to deal with the risks of internationalization that Orascom might face in the future. What lessons could be learned from this experience? What should be done to prevent similar risks to Orascom’s further internationalization?
Information, Media & Telecommunications
Asia/Egypt/India, Large, 2009
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