Algerian government set to take majority stake in Djezzy

The Algerian government is set to acquire a majority stake in the country’s largest mobile operator Djezzy, potentially ending a long-running dispute with the cellco’s owner, Orascom, over ownership of the operator.

The deal appears to have been brokered by VimpelCom, Orascom’s majority-owner. In a statement, VimpelCom said it has entered into a non-binding MoU with the Algerian state and “agreed that it will consider selling a majority stake in Orascom Telecom Algerie (OTA), subject to an acceptable price and satisfaction of other conditions.”

Financial terms were not disclosed, though both parties are to “undertake a process to agree on the valuation of OTA with the involvement of each party’s financial advisors.”

Relations between Orascom and the Algerian government had broken down prior to VimpelCom’s acquisition of Orascom, which closed last year, with the government objecting to Orascom’s efforts to sell its local unit to a foreign partner and wanting to nationalise it instead. Tensions were further ramped up when the government subsequently served Orascom with a US$230 million tax bill, which was disputed by the firm.

While the dispute complicated the VimpelCom/Orascom merger it is thought that the influence of a third party (VimpelCom) may have been instrumental in reaching the agreement. VimpelCom noted that Orascom “has not been party to the discussions regarding the MoU and the transaction.”

Djezzy had 16.3 million subscribers at end-Q3, giving it a 44 per cent share of the Algerian mobile market.