VimpelCom settles Djezzy Algeria dispute

VimpelCom has settled the long-running dispute over the ownership of the Algerian mobile network it acquired when it bought Naguib Sawiris’ Orascom Telecom in 2010 in a US$6 billion deal.

That deal was modified to take into account the difficulty of the situation in Algeria, where the government was seeking to nationalise Orascom’s local subsidiary, Djezzy in a tax dispute.

The matter has finally been resolved.

As a result, Djezzy will be allowed to make a long delayed dividend payment to its Egyptian owners, Global Telecom Holding (formerly Orascom Telecom) of US$1.86 billion.

GTH will then sell a 51 per cent stake in the Algerian mobile network, Djezzy to the Algerian government for US$2.64 billion.

The total dividends and proceeds due to GTH at closing are expected to amount to US$4 billion, net of all taxes and after the settlement of all outstanding disputes between the parties and the payment of associated fines.

That is approximately what VimpelCom had always asked for, as it had previously indicated that it would not accept a valuation of less than US$7.8 billion for the entire company.

All proceeds will be used to pay down the outstanding shareholder loans provided by VimpelCom to GTH.

Although the Algerian government will own a majority stake in Djezzy, it will continue to be managed by GTH and, as a result, both GTH and VimpelCom will continue to fully consolidate Djezzy in their financial accounts.