The Algerian government has acquired a 51% stake in domestic mobile giant Orascom Telecom Algeria (OTA), which operates under the Djezzy GSM brand, for a total consideration of USD2.643 billion. Under the agreement, Djezzy’s parent company Vimpelcom Ltd of Russia will sell portion of its 96.81% stake in the cellco, held via its Egypt-based subsidiary Global Telecom Holding (GTH, previously OTH), to Fonds National d’Investissement (FNI). Following the transaction, which is expected to be finalised by end-2014, Vimpelcom’s shareholding in OTA will decrease to 46%; Cevital, which owns 3% of the operator, however has agreed to sell its share to Vimpelcom for USD178 million, bringing the Russian-backed company’s holding to 49% of Djezzy GSM. The total dividends and proceeds due to GTH at the closing of the deal are expected to amount to USD4.0 billion. Vimpelcom/GTH will retain management control of the Algerian cellco, and will continue to consolidate the operator’s results under International Financial Reporting Standards (IFRS).
Vimpelcom CEO Jo Lunder commented: ‘This favourable long-term agreement and settlement represents a successful outcome for all stakeholders. For Vimpelcom and GTH, this value accretive transaction releases USD4.0 billion in cash proceeds to pay down gross debt. For GTH and Djezzy, it resolves our dispute in Algeria and allows us to solidify our strong leadership position in Algeria by enabling us to further invest in a high speed 3G network to take full advantage of the potential for mobile data growth in the country. We look forward to working with our new partner, the Algerian National Investment Fund, to drive the business forward and to create significant long-term value for all of our stakeholders in line with our strategic value agenda.’