|2012-01-10 - 04:02:00 - DJ Algeria May Buy Stake In Orascom Unit - VimpelCom|
DJ Algeria May Buy Stake In Orascom Unit - VimpelCom
(This story was originally published Monday.)
By William Mauldin and Shereen El Gazzar Of DOW JONES NEWSWIRES
MOSCOW (Dow Jones)--VimpelCom Ltd. (VIP) said Monday that it has agreed in principle to sell a controlling stake in the Algerian unit of Orascom Telecom Holding SAE (ORTE.CI) to the government in Algiers, a step toward lending a lengthy dispute that began after a 2009 soccer match.
VimpelCom and Algeria's finance ministry haven't yet come to a final agreement on price or the exact structure of the partial nationalization, VimpelCom said, adding in a statement it would "consider selling a majority stake" in Orascom Telecom Algerie, known as Djezzy.
The deal, if finalized as expected in 2012, would mark the end of contentious battle between Egypt-based Orascom Telecom, 51.7% owned by VimpelCom, and the Algerian government, which had presented the company with large back-tax bills and threatened nationalization. Orascom Telecom, previously controlled by billionaire Naguib Sawiris, owns 96.81% of Djezzy, which provides about half of the Egyptian company's revenue.
News of an agreement in principle is "cautiously positive" for VimpelCom shares, according to Victor Klimovich, analyst at VTB Capital in Moscow.
"There is not any result yet, but this still shows that there's a rational discussion between VimpelCom and the Algerian government," Klimovich said.
Partly because of regional conflicts, Egypt-based Orascom has allowed the more international VimpelCom to handle negotiations with the Algerian government.
Relations between Algeria and Egypt have been strained after violence erupted following a soccer World Cup qualifying match between the countries in November 2009. A crowd of Algerian supporters attacked the headquarters of Djezzy, smashing windows and destroying office equipment after the match and after that came bureaucratic demands, with Algeria claiming Orascom owed hundreds of millions of dollars in back taxes.
VimpelCom, part-owned by Norway's Telenor ASA (TEL.OS), Russia's Alfa Group and Sawiris, has mobile subscribers in Russia, Italy, and more than a dozen developing economies.
VimpelCom said it expects to retain "governance and management control" of Djezzy through Orascom Telecom and to continue to consolidate the unit's financial results.
Orascom Telecom's stock price suggests a value of $2.62 billion for Djezzy, or 31% below its estimated fair value, according to Cairo-based CI Capital.
"Reaching a settlement with the Algerian government would result in Djezzy being able to operate normally again," said Ahmed Adel, a telecom analyst at Cairo-based Naeem Holding. "The Algerians have realized that they can't afford buying 100% of Djezzy at fair value and thus started exploring the option of buying a controlling stake."
-By William Mauldin and Shereen El Gazzar, Dow Jones Newswires; +7 495 232-9192, email@example.com; firstname.lastname@example.org
(END) Dow Jones Newswires
January 09, 2012 23:02 ET (04:02 GMT)