The FINANCIAL — VimpelCom said Monday that it has agreed in principle to sell a controlling stake in the Algerian unit of Orascom Telecom Holding SAE to the government in Algiers, according to Borsa Italiana – London Stock Exchange Group.
VimpelCom and Algeria haven't yet come to any final agreement on price or the exact structure of the deal, VimpelCom said, but it will "consider selling a majority stake" in Orascom Telecom Algerie, known as Djezzy.
The deal, if finalized as expected in 2012, would mark the end of contentious battle between Egypt-based Orascom Telecom, 51.7% owned by VimpelCom, and the Algerian government, which had presented the company with large back-tax bills and threatened nationalization. Orascom Telecom, previously controlled by billionaire Naguib Sawiris, owns 96.81% of Djezzy.
News of an agreement in principle is "cautiously positive" for VimpelCom shares, according to Victor Klimovich, analyst at VTB Capital in Moscow.
VimpelCom, part-owned by Norway's Telenor ASA, Russia's Alfa Group, and Sawiris, has mobile subscribers in Russia, Italy, and more than a dozen developing economies.
VimpelCom said it expects to retain "governance and management control" of Djezzy through Orascom Telecom and to continue to consolidate the unit's financial results.
Orascom Telecom's stock price suggests a value of $2.62 billion for Djezzy, or 31% below its estimated fair value, according to Cairo-based CI Capital.