Algeria Said to Have Formed Team to Negotiate Purchase of Orascom's Djezzy

Algeria’s government has told Orascom Telecom Holding SAE that it has formed a team to negotiate the possible purchase of the company’s local unit, a person familiar with the matter said.

Talks between the government and the Cairo-based company, the biggest mobile-phone operator in the Middle East by users, may start soon, said the person, who declined to be identified because the discussions are private.

The Algerian government thwarted MTN Ltd.’s bid to buy a number of Orascom’s assets this year in a transaction that analysts valued at $10 billion. The government objected to the inclusion of Djezzy, the local unit and the biggest contributor to Orascom’s revenue in 2009.

Egyptian billionaire Naguib Sawiris, Chairman of Weather Investments SpA, is in talks to merge the bulk of his telecommunications assets with Russian operator VimpelCom Ltd. in a transaction that could create a company valued at more than $25 billion, two people familiar with the talks said on Aug. 20. Weather owns a majority stake in Orascom Telecom.

“It is in his interest to boost Orascom Algeria’s value or sell the business before any deal with VimpelCom is made,” Dalibor Vavruska, an analyst with ING Groep NV, said by e-mail.

Orascom Telecom spokeswoman Manal Abdel-Hamid declined to comment. Algerian officials at the Prime Minister’s office and Finance Ministry couldn’t be reached for a comment.

Shares of Orascom fell 1.9 percent to 5.27 Egyptian pounds at the 1:30 p.m. close in Cairo, valuing the company at 27.6 billion pounds ($4.84 billion).

Algeria’s government appointed a company to assess the value of Orascom Telecom’s local unit as part of a plan to acquire the business, Al Khabar newspaper reported today, citing a senior government official it didn’t identify. The valuation of Djezzy will begin in the second week of September and will take no longer than two months, the newspaper said.

To contact the reporter on this story: Alaa Shahine in Cairo at asalha@bloomberg.net

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