Telecoms group VimpelCom and its Egypt-based subsidiary Global Telecom Holding (GTH) have completed the sale of a 51% stake in Algerian operator Djezzy for US$2.6bn, marking the end of a long-running dispute with Algeria’s government.
VimpelCom…
Telecoms group VimpelCom and its Egypt-based subsidiary Global Telecom Holding (GTH) have completed the sale of a 51% stake in Algerian operator Djezzy for US$2.6bn, marking the end of a long-running dispute with Algeria’s government.
VimpelCom acquired Djezzy via GTH in 2010 as part of a broader US$6bn deal. However, before the deal closed, Algeria announced plans to nationalise the local operator following a dispute with GTH – then known as Orascom Telecom Holdings – over taxes and fines.
In 2012, the Russia-focused operator said it would sell a stake to Algeria subject to an agreement on price but, until April last year, no compromise had been reached.
The 51% interest has been sold to Algeria’s sovereign wealth fund FNI. Under the April agreement, GTH will keep operational control of Djezzy even though its stake has been reduced to 49%.
Commenting on the closing, VimpelCom CEO Jo Lunder said: “Today we have entered into a long-term relationship with the Algerian National Fund, creating a private-public ownership structure for Djezzy … The deal, on a group level, also releases significant cash amounts to GTH and VimpelCom to pay down gross debt.”
The sale sees the parties resolve their tax and fine-related disputes and agree to settle arbitration proceedings.
The Bank of Algeria has also lifted foreign exchange and import restrictions on Djezzy after the Algerian operator paid a AD99bn (US$1.1bn) fine.
Prior to closing, Djezzy secured credit facilities with a syndicate of unnamed Algerian and international banks for AD82bn (US$900m).
Finally, GTH and Cevital, a minority shareholder in the Algerian mobile player, have amended their previously disclosed framework agreement. Cevital will continue to hold a 3.43% interest in Djezzy after the telco paid US$50m plus a dividend to settle pending litigation.
GTH will use the total net proceeds of US$3.8bn, which include Djezzy dividends between 2008 and 2013, to repay existing shareholder loans provided by VimpelCom.
Djezzy is Algeria’s leading mobile operator followed by state-owned Mobilis and Qatar’s Ooredoo.