Orascom Telecom set to settle back-tax claims and Djezzy mobile subscribers dropped by one million at end-June 2010

Egyptian mobile company Orascom Telecom said on Sunday it returned to profit in the third quarter. The company said in an assessment report on its activities of which “Echorouk” got a copy that its bottom financial line in the July-September period was boosted to $934 million.

• Excluding the gain, Orascom’s net profit from continuing operations for the quarter was $112 million. Six brokers and bankers gave an average net profit estimate of $135 million.

   

   

  The company previously said it garnered a net profit of $181 million in the third quarter of 2009 and a $108 million net loss from continuing operations in the second quarter of 2010.

   

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• However, Orascom said the number of subscribers at its Algerian mobile unit Djezzy, its main source of revenue, fell to 14.9 million at end-September from 15.1 million at end-June, although revenues from the unit rose quarter-on-quarter.
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• Orascom’s total third-quarter revenues were $1.07 billion, down about a fifth from a year earlier, but in line with market expectations.

• Meanwhile, Orascom Telecom is said to be seeking arbitration to end a back-tax dispute with the Algerian government that is holding up its $6.6 billion plan to sell assets to Russia’s Vimplecom. 

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  Uncertainty over Orascom Telecom’s Algeria-based Djezzy unit — its biggest revenue earner — could sink the $6.6 billion deal, an outcome which would leave it with crippling debts.

   

  In the letter to Algerian Prime Minister Ahmed Ouyahia and three other senior officials earlier this week, Orascom Telecom Chairman Naguib Sawiris said he was making his last request to the Algerian government to resolve the vexed Djezzy issue.

   

  He said the unit could not continue doing business unless there was an immediate resolution to the row — which revolves around multi-million tax claims and allegations of foreign currency violations.

   

  He argued that Orascom had already incurred billions of dollars in losses.

   

  Orascom Telecom has reluctantly agreed to negotiations with the Algerian government, which says it wants to nationalise Djezzy.

   

• Algerian officials have said that all back-tax claims and other demands against Djezzy have been in accordance with the law, and that Algerian legislation gives it the legitimate right to nationalise the mobile unit.

 

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