Algeria's government, which has said it would block any deal in which South Africa's MTN Group Ltd. (MTN.JO) acquires Orascom Telecom Holding SAE's (ORTE.CI) local mobile operator Djezzy, wants control of the asset itself, a government source said Thursday. Orascom Telecom Algerie, also known as Djezzy, has the largest share of the Algerian market and is Cairo-based Orascom's single biggest revenue source. It is therefore a key asset in discussions ongoing between MTN and Orascom's parent company, Weather Investments SpA, the source told Dow Jones Newswires. The government late Wednesday said it opposed any deal to sell Djezzy and warned any transaction could lead to the withdrawal of the business's telephone license. Orascom Chairman Naguib Sawiris, who with the Sawiris family controls Weather Investments, said he has asked the Egyptian foreign minister to arrange a meeting with the Algerian prime minister and relevant ministers to clarify the issues raised by the Algerian authorities. MTN, meanwhile, said it would inform the market in due course regarding any progress that is made in discussions with Weather Investments that could see it buy some or all of Orascom Telecom, which has a market value of about $7.2 billion. "At this stage, MTN cannot comment further," said Nozipho January-Bardill, MTN executive for corporate affairs. Analysts believe MTN is most likely to be interested in Orascom Telecom's business in Africa, which include operations in Algeria, Burundi, Central African Republic, Namibia, Tunisia and Zimbabwe. Orascom Telecom holds more than 90% of Djezzy directly or through subsidiaries, but Algeria's government said it will exercise a right to take 51% of shares if any sale is agreed. Two people familiar with the matter last week said any deal for MTN to expand its footprint in Africa, where it already is the largest mobile operator, would be complex and may well be derailed by regulatory obstacles. MTN separately said its subscriber base across grew 7% to almost 123.6 million during the three months through March. The compant recorded customer gains across its the 21 countries in Africa and the Middle East in which it operates, including strong growth in Nigeria and Iran.
