Djezzy saga rolls on in Algeria

The Algerian government has hired consultants to assess the value of mobile operator Djezzy ahead of its plans to nationalise the lucrative telco.

Owned by Egyptian company Orascom Telecom, Djezzy has become the centre of a diplomatic tit-for-tat between the two countries that is said to have its origins in Orascom’s construction arm’s 2008 decision to sell its Algerian cement business to France’s Lafarge without consulting local officials.

As the Algerian government has taken an increasingly nationalistic approach to economic policy, Djezzy has become something of a focal point for conflict between two countries that aren’t exactly known for their friendly relations. Orascom is locked in a legal dispute over a $597 million tax bill that Algeria claims Djezzy owes. Djezzy is said to account for a third of Orascom’s revenue.

The knock-on effect of the spat has been the hampering of a multi-billion dollar deal between Russian provider Vimplecom and Orascom: the Russian operator is set to purchase the Egyptian company’s assets but uncertainty over how much the Algerian government is prepared to pay for Djezzy and how the proposed nationalisation will pan out is hindering proceedings.

Djezzy has been Orascom Telecom’s biggest revenue generator and the company has threatened international arbitration unless the issue is resolved soon. Algerian telecommunications minister Moussa Benhamadi has said that the consultation work will be completed by the end of May, after which talks on the future of Djezzy can begin.

The past few months have seen the Algerian government applying increasing pressure to nationalise the telco; last year, it blocked Orascom’s effort to sell Djezzy to South Africa’s MTN and a law has been passed giving the state first refusal should the unit be put up for sale. The company has been valued at $6-7 billion and the Algerian government insists that it will pay the market rate; how the ongoing dispute will affect that value remains to be seen. In the event of an open sale, interested parties are said to be Kuwaiti-held Nedjma, and Abu Dhabi-based Etisalat.

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