Algerian authorities claim ownership of Orascom’s Djezzy despite VimpelCom deal

The recent news of a merger between Orascom and VimpelCom has not dampened the Algerian government’s desire to nationalise Djezzy, Orascom’s Algerian branch.

While some of Orascom’s operations were excluded from the terms of the deal – such as the bankrupt Greek operator WIND Hellas – its Algerian operations are considered highly desirable, and were included in the agreement.

Indeed, Djezzy is considered somewhat integral to the deal; if Orascom is forced to sell its operations in Algeria to the country’s government at a low price, the agreement with VimpelCom could be adversely affected.

The Algerian authorities seem unconcerned, and have reportedly claimed that “any change in the shareholding of Orascom Telecom....does not undermine commitments already made to give Orascom Telecom Algeria to the Algerian state.”

However, with the agreement signed, it is likely that VimpelCom will enter the negotiations with the Algerian authorities, which have reportedly reached a stalemate. The North African country could well come under significant pressure from Russia to relent, with Russian president Dmitry Medvedev potentially addressing the issue on a planned visit to Algeria.

VimpelCom CEO Alexander Izosimov has played down Djezzy’s importance to the deal, saying it is not “critical” to the agreement, while acknowledging it as an “interesting and attractive” asset. Izosimov has also stated that he believes there is a “very high” probability of resolving the dispute.