Monday, 17 January 2011

Algeria: Law firm appointed to advise on valuation of 'Djezzy'

On Monday 10th January, the government provisionally appointed London-based Shearman & Sterling LLP to advise it on the nationalisation of Orascom Telecom's local mobile phone unit, known as Djezzy, and has been instructed to complete a valuation within 100 days. The future of Djezzy is the subject of a long-running dispute between the Algerian government and Orascom telecom.

Djezzy's future has been the subject of almost limitless speculation. Having blocked Djezzy's sale last year to South Africa's MTN, it then looked as if a US$6.6 billion deal with Russia's Vimpelcom might be on the table, especially as Russia's President Dmitry Medvedev made what appears to have been a rather abortive visit to Algiers to expedite the deal. There have recently been rumours that France Telecom may yet have a role to play.

It has long been believed that the Algerian government wants Djezzy for itself, hence the continuous blockages, in the form of fines, back taxes and restrictions on profit transfers that it has erected to thwart any move by Orascom to dispose of Djezzy to any other international player.

In spite of Algeria's obstructive tactics, there is still no clarity about whether the State will actually buy Djezzy, how much it is prepared to pay and how long the process will take. One senses that the appointment of Shearman & Sterling may not even be the 'beginning of the end'.

For more news and expert analysis about Algeria, please see Algeria Focus and Algeria Politics & Security.

© 2010 Menas Associates

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