MOSCOW: Russia’s Vimpelcom has resolved a long-running dispute with the Algerian government by selling it a majority stake in the country’s biggest telecoms operator for $2.6bn, while it will keep control and slash debt.
Orascom Telecom Algeria, also known as Djezzy, is a prized asset, which Vimpelcom bought in 2010 from Egyptian tycoon Naguib Sawiris as part of a more than $6 billion deal as it aimed to diversify outside of Russia.
Algeria that year made moves to nationalise Djezzy, hitting the business with back tax claims and restrictions on imports and foreign exchange transactions, creating uncertainty that has weighed on Vimpelcom’s shares.
On Friday, Russia’s third-largest mobile operator said that Global Telecom Holding (GTH), its 51.9 percent-owned subsidiary, had signed an agreement to sell a 51 percent stake in Djezzy to the Algerian National Investment Fund (FNI) for $2.6bn.
The deal will help Vimpelcom reduce its $27.5bn of gross debt, built up in an acquisition spree, by $4bn. “It’s a great day for the company. It has been a three-year journey, and now it has come to an end,” Vimpelcom Chief Executive Officer Jo Lunder said.
“It is possible for us to take advantage of the very attractive telecom market in Algeria and continue to develop Djezzy, which has been difficult for us all these years,” he said.
GTH will keep a 45.6 percent stake and buy the remaining 3.4 percent of Djezzy shares from minority shareholder Cevital for $178m, Vimpelcom said.
Despite ending up with less than 51 percent, GTH will continue to exercise operational control over Djezzy, based on a shareholder agreement between GTH and the fund.
Reuters
