ALGIERS (Reuters) - The Algeria state announced on Sunday it will acquire a 51 percent stake in Vimpelcom’s Djezzy mobile phone unit and keep Vimpelcom on as operator, but it has still not decided how much it will pay for the stake.
Vimpelcom acquired Djezzy as part of a $6 billion deal to buy the assets of Egyptian firm Orascom Telecom but the transaction was clouded by uncertainty about what Algeria’s government planned to do with the unit.
The long-running saga over Djezzy has come to symbolize for many investors the risks of doing business in Algeria, a north African energy exporter which in the past few years has swung sharply towards economic nationalism.
Telecommunications Minister Moussa Benhamadi was quoted as saying by Algeria’s official APS new agency that the Finance Ministry and Vimpelcom would soon sign an agreement that would allow a valuation of the Djezzy unit to proceed.
Once the transaction was completed, Algeria would become the majority shareholder with 51 percent, and Vimpelcom would be entrusted with managing the unit, the agency reported.
Djezzy was the most lucrative part of Orascom Telecom’s portfolio. The relationship with Algeria’s authorities soured in a dispute over tax, and the government said it would exercise its rights to nationalize the unit.
Vimpelcom inherited the problem when it acquired assets of Wind Telecom, Orascom Telecom’s parent company. It hoped to gain control over Djezzy as part of the deal, or at least receive a fair market price for the unit from the Algerian government.
However, the planned nationalization has been stalled for a year, adding to pressure on Vimpelcom’s management from some shareholders, who were unhappy about the deal with Wind.
In the first sign of progress in the dispute in months, Algerian Finance Minister Karim Djoudi said in November last year that he was in talks with Vimpelcom executives aimed at settling Djezzy’s status.
Editing by Bernard Orr