Algeria: Djezzy valuation disappoints authorities

The process of evaluating the mobile phone operator Djezzy, which the Algerian government wants to buy from Orascom Telecom rather than let the Egyptian owner sell it to a third party, has apparently stalled. The French legal firm Sherman & Sterling, appointed by the government to provide an independent view, has completed its final report on the valuation, but the government has delayed receiving it, after what looks like a disappointing result.

According to “sources close to the file”, Djezzy has been valued at around $7 billion, a sum which is close to the sale price of $7.8 billion demanded by the former Orascom boss Naguib Sawiris when he tried to sell his concession to a South African buyer. The Algerian authorities have indicated that they are willing to pay just $2 billion–3 billion for Djezzy, which is now owned by Russian group Vimpelcom after it bought Orascom Telecom.

The evaluation of Djezzy was scheduled for completion in May this year, and the Algerian authorities indicated that they would go ahead with buying the operator as soon as this process was complete. The delay has met with no official comment or explanation, but it seems that the Algerians are in a something of a bind, and have yet to figure out their next move.

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

© 2011 Menas Associates

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

France's Telecom indicates interest in 'Djezzy'

France Telecom's CEO Stephane Richard said this week that France Telecom may enter Algeria as part of its planned expansion in emerging markets. Richard told reporters in Paris that he was looking to orient France Telecom toward fast-growing countries in Africa, the Middle East and Southeast Asia to offset its stagnant domestic revenues.

France's largest phone company was monitoring developments in Algeria, where it could seek a presence either through existing operator Djezzy or other means, Richard said.

“Algeria is a potentially interesting market, and we will see what happens with Djezzy,” whose parent company Orascom Telecom Holding is currently locked in a dispute with the Algerian government, Richard said.

The current situation with Djezzy is that the Algerian government is reported to be planning to buy Djezzy, possibly in cooperation with a foreign partner, and is seeking advice on a valuation, while Orascom is saying that it will seek international arbitration to contest Algeria's demands to pay more than US$800 million in back taxes and restrictions on transferring money abroad from Algeria. Richard also said that no discussions on entering Algeria are under way.

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

© 2010 Menas Associates

Orascom Telecom sells assets to Russia's VimpelCom

Orascom Telecom, one of Egypt's most popular traded shares, rose 5.5 per cent after the announcement that it had reached a US$6.7 billion deal to sell some of its assets to the Russian company VimpelCom.

The deal is complex and will take some time to unravel. It means that Neguib Sawiris, the billionaire tycoon owner of Orascom, will be even richer. He said that the assets not included in the deal: Egypt's Mobinil and a mobile phone company in North Korea, among others, would be bundled into a new company next year.

The deal may or may not speed resolution of the dispute between Orascom and its subsidiary in Algeria, Djezzy. Hopes that Russia's President Dmitry Medvedev might smooth the way for a resolution of the dispute over Djezzy have yet to emerge.

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

© 2010 Menas Associates