Djezzy no obstacle to Orascom sale

07 December 2010

Orascom-Vimpelcom $6.6bn merger likely to go ahead with or without Algerian unit Djezzy

Weather Investment, which owns 51.7 per cent of Egypt’s Orascom Telecom Holding, is becoming more eager to merge with Russia’s Vimpelcom despite tensions with the Algerian government. The deal is worth $6.6bn

Djezzy, Orascom’s local subsidiary in Algeria, has become a national emblem, the largest mobile operator in terms of subscribers and the country’s most profitable. The government is determined to nationalise it.

Algeria’s tender for a consultant to advise it on the sale was thought to have put the merger in jeopardy. But as the government’s relationship with Weather’s chairman and chief executive, Naguib Sawiris continues to sour and the deadline for a decision approaches, Orascom is becoming more eager for the deal to go ahead with or without Djezzy.

Three Vimpelcom shareholders are hesitant, as they want Djezzy included in the deal. They may soon realise that even if they manage to acquire it, the Algerian government will not make the process easy for them. It has already slapped Orascom with an $830m tax bill despite a five-year tax holiday.

Algeria is expected to take a 51 per cent share in Djezzy, with an international partner set to take a 49 per cent stake. Anyone seeking to bid on this stake should be aware that businesses in Algeria require the blessing of the government and it will need to maintain this blessing in order to avoid any problems. 

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