NOW that Orascom Telecom Holding and Russian VimpleCom have tied the knot, the fate of Djezzy is up in the air. The Algerian Ministry of Finance published an advertisement in Monday's issue of the local official newspaper Moujahed inviting bids from investors interested in advising on the acquisition of Orascom Telecom Algeria, Orascom Telecom Holding's (OTH) branch known as Djezzy. The deadline for receiving bids is 24 November, and results are to be announced the same day, reports Sherine Abdel-Razek. The publication came only a week after Russia's VimpleCom agreed with Weather Investments, which owns 51 per cent of OTH, to acquire its emerging market activities, including the company's largest revenue generator, Algeria's Djezzy. While OTH remained tight-lipped on the issue, a VimpelCom spokeswoman told Reuters news agency the company had expected the Algerian government would ask consultants to hold talks on Djezzy. She said Monday's notice was "all in line with previous statements". Amr El-Alfi, CI Capital head of research, said he thinks Algeria's decision to seek advisers might be positive for shareholders because it suggested "Algeria is not likely to nationalise the company by force. At least it means they will later on be talking," he told Reuters. This development came a few days after Banque d'Algerie, the Algerian central bank, said Djezzy had violated local foreign exchange rules and will be asked to pay $193 million in compensation. As such, the Algerian government will have demanded a total of $1.07 billion between back taxes and fines since last October, when a football match between the national Algerian and Egyptian teams triggered a political row and led soccer fans to attack Djezzy premises in Algiers. Last week, in a televised interview in Egypt, OTH Chairman and CEO Naguib Sawiris cited problems in Algeria as the main reason behind his decision to sell his company for half its worth. He mentioned Algerian grudges against his youngest brother Nassef Sawiris that came about after he sold an Algerian cement unit his company Orascom Construction Industries owned to French Lafarge. The root of the grudge is political: France occupied Algeria for more than 130 years. "We tend to think that there will be a resolution for the Djezzy issue sooner or later given that Mr Sawiris has effectively taken a back seat in negotiations and VimpelCom has taken the lead," stated a CI Capital Research note. Local investment banks CI Capital and Beltone suggest that the best scenario for Djezzy would be its partial sale to the Algerian government, so that it owns 49 per cent of the company, while the remaining 51 per cent is retained by OTH. As such, VimpleCom would gain control over Djezzy, while the Algerian government would benefit from a capital gains tax on the sold stake and its investment in Algeria's largest and most profitable mobile operator. The price of the deal, whether it will involve all or part of the company, remains unclear. VimpelCom CEO Alexander Izosimov said he expected Djezzy to be worth seven times its earnings before interest, taxation, depreciation and amortisation, bringing the unit's value to about $7 billion, roughly the equivalent to what South Africa's MTN group offered to pay for the company earlier this year. Algerian industry and government sources said they believe a fair price for Djezzy would be between $2-3 billion.
