Egypt’s Orascom Telecom is in talks to sell its Algerian unit Djezzy to MTN Group and the Algerian government takes a positive view of the sale, a senior government source said on Monday.
Two other people familiar with the matter have told Reuters the firms are discussing MTN’s purchase of Djezzy plus Orascom’s four sub-Saharan assets, grouped under the Telecel Globe brand. They said MTN is likely to end up paying around $8 billion for the assets.
"We have been informed," about the negotiations between Orascom and South Africa’s MTN, the Algerian government source told Reuters. "Orascom had no alternative but to inform us, and it did that."
Algerian law allows the government to block the sale.
Asked if the Algerian government would approve a deal, the source said: "Having the South Africans in the telecoms sector in Algeria instead of the Egyptians is a good solution for us."
Djezzy is Orascom’s most troubled unit, the subject of a disputed tax bill and tension between the government in Algiers and the group of companies controlled by the family of Orascom Telecom’s executive chairman Naguib Sawiris.
The Telecel Globe-branded assets are in Zimbabwe, Namibia, Central African Republic and Burundi. Analysts say they would complement MTN’s presence in South Africa, Nigeria, Ghana, Uganda and Rwanda and grant further access to tiny markets with great potential for growth.
Johannesburg-based MTN is Africa’s largest mobile phone operator by subscribers, but it relies on a just a handful of markets — Nigeria, South Africa and Iran — for the bulk of its revenue.
Acquiring Djezzy would give it a foothold in Algeria as it faces tougher competition from former suitor Bharti Airtel, which has made an aggressive push into Africa.
A separate banking source told Reuters on Thursday that MTN was seeking $5 billion to buy some of Orascom’s African assets including Djezzy, its biggest source of revenue.
The two other sources familiar with the matter said one structure under discussion is MTN buying all of Orascom for around $10 billion and then selling back the bits it does not want — Egypt, Tunisia and North Korea among them.
"It would need to be a very structured transaction," one said.
Trading in Orascom Telecom was suspended on Monday. The firm said it would disclose material information on Tuesday.