OT says Ramadan may be delaying Djezzy talks: report

CAIRO (Reuters) - The Muslim fasting month of Ramadan may be delaying the start of talks between the Algerian government and Egypt's Orascom Telecom (ORTE.CA) to buy the mobile firm's Djezzy unit, an executive said on Sunday.

Orascom said in May it would start talks to sell the unit, its top revenue earner, to the government after Algeria refused to let Orascom sell Djezzy to South Africa's MTN (MTNJ.J). But talks have yet to begin.

"It's possible the summer, Ramadan held up the start of these negotiations a little, but we are waiting to start these negotiations soon," Chief Executive Officer Khaled Bichara told Al Arabiya satellite television.

Two sources told Reuters on Thursday that telecoms group Vimpelcom (VIP.N) was in early talks to buy a majority share of Orascom from tycoon Naguib Sawiris, but analysts say such a deal will likely depend on resolving the firm's Algeria problems.

Ramadan, which is based on the lunar calendar, began on August 11 in most Middle East states and is expected to end on September 8 or 9.

Orascom's trouble in Algeria worsened after the government served the unit with a $597 million back tax bill last year. Algeria has also blocked the company from transferring money outside the country.

Bichara said he saw two solutions to the situation in Algeria: Either the state buys the unit or it lets the company work in an easier environment.

"The inability to transfer (money out of the country) could affect the network in the long term," Bichara said, adding that in the short term the company could use existing equipment and buy internal services.

Performance at Djezzy exceeded analysts' expectations in the second quarter, with revenue and subscriber numbers both up compared with the first quarter.

(Reporting by Alexander Dziadosz; Editing by Erica Billingham)