MTN in talks for Djezzy

Egypt's Orascom Telecom is in talks to sell its Algerian unit Djezzy to MTN Group and the Algerian government takes a positive view of the sale, a senior government source said on Monday.

• Two other people familiar with the matter have told Reuters the firms are discussing MTN’s purchase of Djezzy plus Orascom’s four sub-Saharan assets, grouped under the Telecel Globe brand. They said MTN is likely to end up paying about $8-billion for the assets.
• “We have been informed,” the Algerian government source said. “Orascom had no alternative but to inform us, and it did that.”
• Algerian law allows the government to block the sale.
• Asked if the Algerian government would approve a deal, the source said: “Having the South Africans in the telecoms sector in Algeria instead of the Egyptians is a good solution for us.”
• Djezzy is Orascom’s most troubled unit, the subject of a disputed tax bill and tension between the government in Algiers and the group of companies controlled by the family of Orascom Telecom’s executive chairman Naguib Sawiris.
• MTN last year failed to finalise a $24-billion merger with India’s Bharti Airtel. Bharti later bought the African assets of Kuwait’s Zain for $9-billion.
• MTN is Africa’s largest cellphone operator by subscribers, but it relies on just a handful of markets – Nigeria, South Africa and Iran – for the bulk of its revenue.
• A separate banking source said last week MTN was seeking $5-billion to buy some of Orascom’s African assets including Djezzy, its biggest source of revenue.
• On Friday MTN said only that it was in talks about a potential deal.
• Djezzy is seen as an attractive asset despite Orascom’s troubles. It has about 60% of a market with 72% penetration, according to Ahmed Adel from Naeem brokerage.
• Analysts value the unit at between $6-billion and $7-billion, but say government pressure could lower the price.