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Algerian government acquires majority stake in market leader

The ongoing disagreement over the ownership of Algeria’s market leading operator Djezzy could soon come to a close, following the announcement that the country’s government is to become a majority stakeholder in the firm.

The operator is currently owned by Orascom, itself majority owned by Russia’s VimpelCom. The Russian firm has stated that it has signed a non-binding MoU with the relevant Algerian authorities, agreeing to “consider selling a majority stake in Orascom Telecom Algerie (OTA), subject to an acceptable price and satisfaction of other conditions.”

While the price of the stake is as yet undecided, it will be finalised by both parties via “a process to agree on the valuation of OTA with the involvement of each party’s financial advisors.” VimpelCom appears to have brokered the new agreement, mentioning in its statement that Orascom “has not been party to the discussions regarding the MOU and the transaction.”

The dispute over Djezzy’s ownership came about as a result of the Algerian state’s objection to VimpelCom’s then proposed acquisition of Orascom last year – the country’s authorities took exception to Orascom selling its Algerian operations to a foreign firm, which threatened to derail the VimpelCom deal.

The Algerian government argued that Djezzy should instead be nationalised, and exacerbated the situation by issuing a US$230 million tax charge to Orascom. The operator denied that it owed this amount. Djezzy’s market share at the end of Q311 was 44% with 16.3 million subscribers.

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