Algerian government could buy Orascom’s Djezzy

The Algerian government is willing to buy Orascom’s Algerian operation ‘Djezzy’, the Telecommunications Minister Hamid Bessalah confirmed today. No comment was made regarding what size equity the government might hope to acquire.

The announcement follows reports the government could block the sale of Djezzy to South Africa’s MTN, through a law which gives the government first right of refusal to a party wishing to buy a majority stake in the operator.

Orascom confirmed on April 28 it was in talks with MTN over the sale of Djezzy or possibly the entire Cairo-based group. The following day the government stated it was opposed to the sale of the Algerian unit, which it is now considering to snap up for its self. Orascom’s chairman Naguib Sawiris has requested talks with the authorities in this regard.

If the Algerian government should take control of Djezzy and not leave an attractive share for MTN, it is unlikely that a takeover bid by MTN of Orascom would go ahead. Djezzy is the most profitable operation in the Egyptian operator’s portfolio and without it, the acquisition of remaining assets are not as appealing.

The 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.

Taking into consideration Orascom’s debt, the group has been valued by analysts to have an enterprise value of between US$11-12.6 million.