Vimpelcom puts USD7.8 billion price tag on Djezzy; Algerian government has other ideas

12 Oct 2010

Russian operator Vimpelcom has conceded that it is happy to sell its potential stake in lucrative Algerian asset Djezzy, but only if the Algerian government is willing to match its USD7.8 billion valuation. According to local media reports the Algerian government envisions a figure in the range of USD2 billion–USD3 billion for the cellco. The hotly contested unit has been the source of much speculation in recent years, and has come to the fore once again following last week’s deal between the Russian telco and Egyptian entrepreneur Naguib Sawiris, which includes Orascom Telecom, and its most valuable asset Djezzy.

Last week, Russian president Dmitry Medvedev held talks with Abdelaziz Bouteflika, his Algerian counterpart, in an effort to smooth the way for Vimpelcom to own and run Djezzy. However, Vimpelcom CEO Alexander Izosimov, who was also in attendance, noted that the Algerian government are firmly focused on buying and nationalising Djezzy themselves. Izosimov reasserted that whilst Vimpelcom’s preference is to own Djezzy, any transaction would not kill the deal between Vimpelcom and Weather Investments. Further, Izosimov claimed that Vimpelcom would consider legal action if the government makes a move to extract the asset on its own terms. One possible compromise that has been mooted is for Vimpelcom to run Djezzy, with the Algerian government taking a significant stake in the mobile operator.

As previously reported in CommsUpdate Russian telco Vimpelcom announced that it has reached an agreement with Weather Investments, the investment vehicle founded and run by Naguib Sawiris, under which the duo will merge. Under the terms of the deal, which the companies claim will create the world’s fifth largest mobile group by subscribers, Vimpelcom will take control of Weather’s 51.7% stake in Egypt-based cellular group Orascom Telecom Holding, among other assets.

Algeria, Beeline (Russia), Optimum Telecom Algerie (Djezzy), VEON