MTN offers US$7.8 billion for Orascom’s Algerian operation

Orascom Telecom’s chairman, Naguib Sawiris, has confirmed that South Africa’s MTN has offered US$7.8 billion to purchase the group’s most profitable unit – Djezzy in Algeria. The confirmation comes after the announcement that Orascom was about to enter talks with Algeria’s government over the sale of the operation.

Algeria’s government had previously threatened to block any deal between MTN and Orascom, saying it had the first right to bid in any proposed transaction of a company in Algeria, before foreign parties. If the deal with MTN were to go ahead, there remains regulations which stipulate that any foreign company wishing to invest in the country must cede a 51 per cent shareholding to locals.

It was previously suggested that MTN could buy the whole of Orascom including all its subsidiaries, which had been valued by analysts to have an enterprise value of between US$11-12.6 million.

The lucrative Algerian unit contributed almost 37 per cent to Orascom’s group revenues in 2009. The other operations are based in Egypt, Tunisia, North Korea, Bangladesh, Pakistan, the Central African Republic, Burundi, Namibia and Zimbabwe.