Orascom Telecom, the Egyptian mobile phone operator, has revealed that it will cancel its dividend for 2009, confounding market expectations that the telco would announce talks with South African operator MTN to buy some or all of Orascom’s assets.
In a…
Orascom Telecom, the Egyptian mobile phone operator, has revealed that it will cancel its dividend for 2009, confounding market expectations that the telco would announce talks with South African operator MTN to buy some or all of Orascom’s assets.
In a statement to the Egyptian Exchange on 27 April, Orascom said that it would not pay its dividend this year because it needed the money to fight a legal challenge against the Algerian tax authorities.
Orascom finished paying off a US$597m bill for back taxes at its Algerian subsidiary Orascom Telecom Algérie on 11 April. By cancelling the dividend, Orascom headquarters in Cairo has cushioned itself against the Algerian courts rejecting its appeal. It could also use the extra money if the Algerian authorities levy further charges on Orascom Telecom Algérie.
When Orascom announced that it was planning to make a statement, Egyptian stock market traders and analysts following the company assumed that Orascom was in talks with MTN to buy assets including the Algerian business.
MTN made a statement to the Johannesburg Stock Exchange on 23 April that it was in talks with another company “that may or may not lead to a transaction”.
