‪Algeria Egypt saga over Djezzy ends‬

By Nicholas Norbrook and Prince Ofori-Atta
Posted on Friday, 13 January 2012 18:47

The threat of nationalisation no longer hangs over Algeria’s number-one mobile phone operator, Djezzy. It is a certainty.

After threatening to poison the economic relationship between Algeria and Egypt, the uncertain status of Djezzy, owned by Egypt’s Orascom Telecom, is finally being settled.

Considered one of the cash cows of North African telecoms and with a 47 percent share of the Algerian mobile phone market, Djezzy has had problems with the government dating back to 2007.

In late 2010, Russia’s Vimpelcom agreed to invest in Orascom Telecom, which is owned by Egyptian billionaire Naguib Sawiris. The Algerian government stepped in and said that it would buy Djezzy, raising the spectre of unpaid back taxes to try to force the issue.

The Russo-Egyptian deal finally went through in March 2011, with Sawiris and Vimplecom becoming joint owners.

The multi-billion Vimpelcom-Orascom merger saw the emergence of the world’s fifth largest mobile operator.

This week came news that Algeria had moved to obtain a 51 percent stake in Djezzy, after successful talks with Vimpelcom.

In November, analysts argued that should the government nationalise the company, Sawiris’s Wind Telecoms, which owns Orascom Telecom, would be forced to recompense the Russians.

Nevertheless, the Algerian government’s decision to use the awarding of a 3G licence as a bargaining chip has proved successful.

Preventing Djezzy from running a 3G network would have decreased its attractiveness to investors. Valued at $7bn by independent auditors Shearman and Sterling, the lack of a 3G licence could have allowed Algeria to buy the asset at much closer to its $3bn valuation.

So far, no figures have been released by the negotiating partners as to the date or the amount involved in the Algerian government’s 51 percent stake in Djezzy.

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