The Algerian government has blocked South African telecoms giant MTN from taking over Orascom Telecom Algérie, the Algerian subsidiary of Egypt’s Orascom Telecom.
By stopping the sale of the company, which trades as Djezzy, the Algerian authorities’…
The Algerian government has blocked South African telecoms giant MTN from taking over Orascom Telecom Algérie, the Algerian subsidiary of Egypt’s Orascom Telecom.
By stopping the sale of the company, which trades as Djezzy, the Algerian authorities’ action may prevent MTN from buying any part of Orascom.
MTN announced on April 28 that it was talking to Orascom’s parent company, Weather Investments, about acquiring all or part of the Egyptian company.
As Algeria contributed 49% of Orascom’s Ebitda in 2009, MTN would find Orascom a much less attractive asset without Djezzy.
The Algerian government will freeze the capital of Djezzy if Orascom attempts to transfer any part of its 97% stake in the company to another investor, said Hamid Bessalah, the minister of communications, in a statement.
“The government opposes any transaction between MTN and Orascom that includes Orascom Telecom Algérie,” said the statement. “The Algerian government also opposes the transfer of all or part of the property of Orascom to MTN. All transactions concerning Orascom Telecom Algérie will be null and void, and could result in the removal of the mobile phone licence from the company.”
The minister left open the door for the transaction to go ahead by inviting MTN and Orascom to travel to Algiers to discuss the terms of a potential deal.
According to a spokeswoman for Orascom, Naguib Sawiris, the chairman of both Weather and Orascom, asked the Egyptian foreign minister to arrange a meeting with Algeria’s prime minister to resolve the dispute.
The Algerian government turned on Orascom, which is one of the largest foreign direct investors in Algeria outside the energy sector, in November last year when it issued Djezzy with a US$597m bill for unpaid taxes in the 2005, 2006 and 2007 tax years.
Orascom also owns telecoms operators in Egypt, Tunisia, Burundi, Central African Republic, Namibia, and Zimbabwe. Orascom jointly owns the Tunisian operation – called Tunisiana – with Qatar’s Qtel.
In a statement, a Qtel spokesman said: “Qtel is aware of the announcement from Orascom relating to negotiations with MTN and will continue to monitor developments closely. Qtel currently partners with Orascom in Tunisia via its subsidiary NMTC, which has a 50% stake in Tunisiana.”
TelecomFinance understands that EFG-Hermes is advising Orascom on the sale.
