A senior Algerian government official reportedly told Reuters that Algeria wants to see Orascom leave the country, where it controls mobile operator Djezzy.
The comments confirm the sour relationship that has plagued the two parties, especially since a…
A senior Algerian government official reportedly told Reuters that Algeria wants to see Orascom leave the country, where it controls mobile operator Djezzy.
The comments confirm the sour relationship that has plagued the two parties, especially since a scandal surrounding Orascom Construction’s sale of its Algerian cement assets to Lafarge in 2008.
In the most recent sign of the worsening situation, Algerian tax authorities have accused Orascom of owing US$596.9m in unpaid taxes and damages. The Egyptian operator had to provide US$120m in cash upfront to appeal the case, which it funded by carrying out its first ever rights issue.
Last December, Orascom admitted to having held “non-serious” talks with a potential acquirer for its Algerian operations, but said these ended after the tax row erupted.
Media rumours have tipped Vivendi, Algerie Telecom and Algerian food producer Cevital, which owns 3.2% in Djezzy, as potential buyers.
Some even suggested that Vivendi could table a joint bid with Cevital and local energy firm Sonatrach, which owns a 22,000km-long fibre optic network.
However, Vivendi’s ownership of Maroc Telecom means it could also run into political difficulties if it enters Algeria. Considering that Maroc Telecom is a cash cow for Vivendi, the group would probably think twice before jeopardising it.
Djezzy is one of Orascom’s most profitable operations and despite the group’s denial that it is on the block, Orascom’s debt situation and its problems with authorities could work in favour of a sale.
However, it is unlikely to part with it for a small price and executives have previously pointed to the sale of Meditel in Morocco – sold at 8.3x EBITDA – as an indication of a fair valuation.
Egyptian investment bank EFG-Hermes has pinned US$6.4bn as a fair minimum price for a sale of Djezzy.
But efforts to choose a buyer could again be thwarted by the Algerian state, which has a right of first refusal if Orascom Telecom sells Djezzy.
Djezzy accounts for 51% of Algeria’s mobile market, while state-owned Algerie Telecom and Qtel’s Wataniya share the rest.
