CAIRO: Egyptian telecom giant Orascom Telecom said Thursday its chief executive is seeking a meeting with Algeria’s prime minister after officials there said they would block any proposed sale of OT’s subsidiary in the country.
The Cairo-based Orascom said in a statement that Naguib Sawiris has asked Egypt’s foreign minister to arrange a meeting with the Algerian premier "and the relevant ministers to clarify all the concerns of the Algerian government."
Orascom, whose Algeria subsidiary Djezzy is a key part of the company’s operations, confirmed Wednesday that its parent firm, Weather Investments, was in talks with South Africa’s MTN Group over the possible sale of all or some of OT’s assets.
Analysts have said the potential deal is likely to encompass Orascom’s Africa assets, most notably Djezzy. But the swift response from Algeria’s government Wednesday threatening to block any potential sale of Djezzy threatened to complicate any deal between OT and MTN, analysts said.
In a research note released Thursday, Cairo-based Mideast investment bank Beltone Financial said the Algerian government’s stance about any attempt to circumvent investment laws in the country "means that a deal structure to sell 100 percent of Orascom Telecom, instead of individual assets, is not a solution to avoid complications with the Algerian government."
Beltone said that reaching a reconciliation with the Algerian government "is a key requirement to the closure of such a deal." It added that "a hurdle to the sale of Djezzy is, consequently, posing a hurdle to a possible sale of some, or all, of Orascom Telecom’s assets."
OT has been locked in a back-tax dispute with the Algeria involving Djezzy that has forced the company to file repeated appeals and pay a significant portion of the tax bill as a prerequisite to challenging the government.
Orascom has disputed the Algerian claims about the taxes
Algeria’s Finance Ministry issued a statement Wednesday following the news of the OT-MTN talks, saying that the law "provides that the state can pre-empt any transaction."
The statement quoted Finance Minister Karim Djoudi as saying he notified the companies and stressed that "the law shall be applied."
Djezzy represents a major portion of OT’s operations, with Beltone saying it contributes to 47 percent of Orascom’s total earnings before interest, tax, depreciation and amortization.
OT and France Telecom joint own Mobinil, Egypt’s largest mobile phone service provider by subscribers. Orascom also operates GSM networks in Algeria, Tunisia, North Korea, Canada, Pakistan, Bangladesh, the Central African Republic, Zimbabwe, Burundi and Namibia.