VimpelCom and its Egypt-based subsidiary Global Telecom Holding (GTH) completed the sale of a 51 per cent stake held by GTH in Omnium Telecom Algeria SpA (OTA), also known as Djezzy, to the Algerian National Investment Fund (FNI) for $2.6 billion (€2.3 billion).
The move brings to an end a dispute over Algeria's moves to privatise Djezzy--which was formerly known as Orascom Telecom Algeria (OTA)--and is the conclusion of a deal reached between VimpelCom and Algeria last April. That agreement also concluded a four-year ownership and tax battle between VimpelCom and the Algerian government that prevented the operator from importing infrastructure into the country and its local business from paying out dividends.
"Today, we have entered into a long-term relationship with the Algerian National Fund, creating a private-public ownership structure for Djezzy. With this new ownership structure, Djezzy is positioned better than ever to lead the way in Algeria, offering customers high quality mobile services and the best digital experience. The deal, on a group level, also releases significant cash amounts to GTH and VimpelCom to pay down gross debt," VimpelCom CEO Jo Lunder said in a statement.
Although its stake will now be below 51 per cent, GTH will retain operational control over the Algerian mobile operator under the terms of a shareholder agreement between GTH and FNI. Both GTH and VimpelCom will continue to fully consolidate Djezzy.
Total net proceeds from the sale, including OTA dividends in respect of the financial years 2008-2013 paid to GTH, will amount to around $3.8 billion net of all taxes. After settlement of all outstanding disputes between the parties as well as the payment of associated fines, they will be used to pay down existing shareholder loans provided by VimpelCom to GTH, the companies said.
VimpelCom originally acquired Djezzy from Egyptian billionaire Naguib Sawiris as part of a more than $6 billion deal that saw the Amsterdam-based Russian operator combine with Wind Telecom to create a new European-based global operator with operations in 20 countries.
Djezzy was launched in February 2002. As of Mar. 31, 2014, it served 17.6 million customers on its network and had a 51 per cent market share.
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