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