MOSCOW: The battle for control of Algerian telecoms business Djezzy will be over in weeks, and whatever the outcome, Russian group Vimpelcom expects its plan to buy billions of dollars of Egyptian-owned assets to go ahead.
"My feeling is that we will see clarity within weeks, not months. In the view of how the deal progresses, we are moving as planned," Vimpelcom CEO Alexander Izosimov told Reuters by telephone from Amsterdam.
"The situation should not impact the outcome of the deal," he added.
Izosimov said he was still counting on Russian political support as the firm seeks to keep Algeria-based Djezzy, Orascom’s most lucrative asset, but which the Algerian government wants to nationalize.
Vimpelcom launched a $6.6 billion cash and shares bid for telecoms assets owned by Egyptian tycoon Naguib Sawiris, including Orascom and Italy’s Wind, earlier this week, but the Djezzy issue swiftly became the main uncertainty surrounding the deal.
Izosimov said the issue was raised by President Dmitry Medvedev during his talks with his Algerian counterpart on Wednesday. The talks yielded no public assurances that the north African nation’s biggest mobile phone operator would be part of Vimpelcom’s ambitious acquisition plan.
"I think political support is…not limited to a President or Prime Minister visiting and raising a question. Certainly we hope that the Russian government will support us until this issue is resolved," Izosimov said.
Fair value
Izosimov, who accompanied Medvedev to Algiers, said the value at which the Algerian government could buy Djezzy had not been discussed during his visit.
"No figures have been mentioned, because the valuation process … has not even started yet," he said.
But he said he would expect a company generating earnings before interest, taxation, depreciation and amortization (EBITDA) of more than $1 billion — such as Djezzy — to be valued at seven times EBITDA.
On this basis Djezzy would be worth around $7 billion.
"Our preference would be to keep the company, and we are ready to consider various options here. We said we are ready to start from a drawing board and hope to receive the Algerian government’s response," he said.
"The situation is very sensitive because Djezzy is the second or third (biggest Algerian company) by scale and is a significant player in the Algerian economy. This is why everything surrounding it has quite a big political load… but I am optimistic that we will be able to proceed to a more pragmatic discussion of the issue."
No from Algeria
Algeria said it will not negotiate the future of mobile telephone operator Djezzy, which it aims to nationalize, with would-be buyer Vimpelcom, according to a newspaper quoting an unnamed government source.
Algeria’s government says no transfer of Djezzy’s ownership is valid without its agreement, and it says it has not changed its plans to nationalize the unit.
"It is out of the question that Algeria will negotiate Djezzy’s case with the Russians. We will talk only to the Egyptians, full stop," the El Watan newspaper quoted the unnamed government official as saying.
"The arm-wrestling match" between Algeria and Orascom Telecom chairman Naguib Sawiris over Djezzy would continue "whatever the consequences," the official told the paper.
Those remarks appeared to be at odds with the view of Vimpelcom CEO Alexander Izosimov, who told Reuters in an interview on Friday he believed the Djezzy dispute could be resolved in weeks, rather than months.
Russian officials raised the issue of Djezzy’s future with the Algerian authorities during a visit to Algeria last week by Russian President Dmitry Medvedev, but more talks are needed, Izosimov said.
If it is goes ahead, the deal between Vimpelcom and Orascom Telecom would create the world’s fifth biggest mobile telephone operator.
However, analysts say the deal could be scuppered if Vimpelcom is unable to acquire Djezzy, or at least sell it to the Algerian state for something approaching its market price.
