By Hamid Ould Ahmed
ALGIERS, March 29 No price has been agreed for
Algeria's planned purchase of 51 percent of Vimpelcom's
local mobile phone unit Djezzy and talks, which have already
dragged on for over a year, could take several more months, the
country's finance minister said.
The comments came a day after a senior finance ministry
source told Reuters Algeria would pay $6.5 billion for a
controlling stake in Djezzy, pushing up the New York-traded
shares of Vimpelcom.
"We are still in negotiations. Negotiations are ongoing.
Until now the price has not been specified," Karim Djoudi told
reporters after a parliament session on Thursday .
"We will work in these negotiations to set the real value."
Analysts immediately cast doubt on a figure they said far
exceeded market expectations. They said the number most likely
referred to the valuation of Djezzy as a whole rather than the
price Algeria might pay for a controlling stake.
"We would have expected $6.5 billion for the whole asset not
51 percent. We were expecting $4.5-6.5 billion," Nadine
Ghobrial, associate vice president of equity research at
EFG-Hermes in Cairo, told Reuters. "I do not think this figure
makes sense. I think everyone is surprised."
Russia-focused Vimpelcom acquired Djezzy last year as part
of a $6 billion deal to buy assets of Egyptian firm Orascom
Telecom, but the transaction immediately became
clouded in uncertainty after the Algerian government demanded a
majority stake in the unit.
Djezzy was the most lucrative part of Orascom's business,
but negotiations to buy the firm have dragged on for over a year
and have been complicated by a long-running court case mounted
against Djezzy by the Algerian central bank over alleged
breaches of foreign exchange rules.
Vimpelcom finally agreed in January to sell Algeria a 51
percent stake in the unit. It said at the time it had signed a
Memorandum of Understanding with the Algerian government to
explore the sale, subject to agreeing an acceptable price.
Algeria's finance minister said earlier this month the
country had received a valuation for Djezzy, which was expected
to form the basis of price negotiations with Vimpelcom, but
declined to reveal that valuation while talks were ongoing.
In a sign that talks could yet drag on further, Djoudi said
on Thursday no deadline had been set to reach a deal
"There is not any timeline to complete the negotiations and
reach an agreement on price. This could happen in two weeks or
two months, or maybe even months," Djoudi said.
Orascom's Cairo-listed shares were down 4.35 percent at 1336
GMT, with the Algerian minister's comments apparently dashing
earlier hopes that a resolution to the dispute was at hand.
The long-running saga over Djezzy has come to symbolise, for
many investors, the risks of doing business in Algeria, a North
African energy exporter which in the past few years has swung
sharply towards economic nationalism.
Analysts and sources say the Algerian government is using
the long-running court case against Djezzy as a lever to
increase pressure on Vimpelcom and bring down the price.
Djoudi appeared to suggest on Thursday that Algeria was
treating the two issues as part and parcel of any deal.
"The negotiations with Vimpelcom include this file (talks
over the purchase of Djezzy) and some problems also," he said.
An Algerian court found Djezzy's top executive guilty of
breaching foreign exchange regulations on Wednesday and ordered
him to pay 93 billion dinars ($1.3 billion) in fines.
An Algerian judicial source said the case, in which the
Algerian central bank accused Djezzy of "making false statements
regarding the import of services", could also carry a jail term.
The criminal ruling was postponed for two weeks, he said.
Both Orascom and Vimpelcom will appeal against the fines.
Orascom said its executive in Algeria had acted in compliance
with the law and that the lodging of the appeal would suspend
the judgment for the time being.
The senior finance ministry source said on Wednesday that
the ruling would likely anger Vimpelcom, which he said was eager
to resolve the dispute and get on with doing business.
Contacted by Reuters on Wednesday over the $6.5 billion
figure, Vimpelcom spokesman Bobby Leach would not comment.