GTH sells Djezzy stake for USD2.6bn

2 Feb 2015

Egypt-based Global Telecom Holding (GTH) has sold a 51% stake in Algerian telecoms operator Omnium Telecom Algerie (formerly Orascom Telecom Algeria [OTA], operating as Djezzy) to the Algerian National Investment Fund (Fonds National d’Investissement [FNI]) for USD2.6 billion. According to a press release, GTH and the FNI have entered into a shareholders agreement, under which GTH, itself part of the Russian-backed Vimpelcom group, will continue to exercise operational control over the Djezzy-branded mobile operations. In addition, GTH and OTA’s minority shareholder Cevital amended their framework agreement and under the revised document, Cevital will hold 3.43% of the share capital of the Algerian operator. Meanwhile, all import restrictions and overseas foreign currency transfer sanctions imposed on the operator by the Bank of Algeria were lifted, following the payment of a fine worth DZD99 billion (USD1.1 billion) to the Algerian Treasury.

Previously, OTA (Djezzy) was 96.81% owned by GTH (renamed in September 2013 from Orascom Telecom Holding [OTH]), itself a 51.9%-owned division of Russian-controlled, Netherlands-headquartered Vimpelcom since an April 2011 merger. GTH held its OTA stake directly and indirectly via two holding companies Oratel and Moga Holding. Following the closure of the deal, however, OTA’s ownership structure is as follows: Algerian government (51.00% via wholly-owned FNI), GTH (45.57%) and Cevital (3.43%).

Jo Lunder, Managing director of Vimpelcom said: ‘We have entered into a long-term relationship with the [FNI] fund through creating an ownership structure for Omnium Telecom, with a public-private partnership… This structure will make Omnium Telecom one of the pioneers in Algeria, and will allow it to offer high-quality mobile services and the best digital services to customers.’

According to TeleGeography’s GlobalComms Database, negotiations between GTH and the government in regards to the sale of Djezzy have dragged on for more than two years; in December 2012 it was reported that the Algerian government and Vimpelcom formed a new 51/49 joint venture company to operate Djezzy and bring negotiations between the two sides a close, but GTH later reportedly denied its establishment, and the stalemate persisted. In March 2013 a government ruling ‘approved’ an ownership transfer plan including the adoption of the Omnium Telecom name (in addition to ‘lifting sanctions’ on the cellco), but it was reported in May 2013 that negotiations had been suspended, following the news that the state was seeking a new valuation for Djezzy. A breakthrough was reported in April 2014, when Vimpelcom and the Algerian government finally agreed in principle to a 51% stake deal, and in August that year GTH approved the USD2.6 billion sale of 51% of OTA to the FNI while enabling Vimpelcom/GTH to retain management control.

Algeria, Global Telecom Holding (GTH, formerly OTH), Optimum Telecom Algerie (Djezzy), VEON