VimpelCom ended a four-year dispute with Algeria's government as part of a deal to sell a majority stake in Orascom Telecom Algérie--which operates as Djezzy--to a state investment agency.
VimpelCom CEO, Jo Lunder
The Amsterdam-based operator said Friday it has agreed to sell a 51 per cent stake in Djezzy to the Algerian National Investment Fund for $2.6 billion (€1.8 billion). Djezzy will also pay VimpelCom and its holding company Global Telecom Holding (GTH) $1.8 billion just prior to the deal closing, which is expected to happen by the end of 2014.
VimpelCom said the transaction would leave it with $4 billion to put towards reducing group debt, and paying down loans it provided to GTH. The operator has built up debt of $27.5 billion through the acquisition of businesses in Italy, Algeria, and Asia from Egyptian telecoms tycoon Naguib Sawiris, Bloomberg reported.
The agreement also concludes a four-year ownership and tax battle between VimpelCom and the Algerian government that prevented the operator importing infrastructure into the country, or its local business paying out dividends. VimpelCom has agreed to pay a 99-billion-dinar (€907 million/$1.2 billion) fine to settle the case, and will book a one-off charge of $2 billion in its 2013 earnings.
VimpelCom CEO, Jo Lunder, said the deal "allows us to solidify our strong leadership position in Algeria, by enabling us to further invest in a high speed 3G network to take full advantage of the potential for mobile data growth in the country."
Although VimpelCom and GTH are selling 51 per cent to Algeria's National Investment Fund, the two companies will continue to include Djezzy's results in their financial statements. GTH will also retain operational control of Djezzy, but with the caveat that some key decisions will be voted on by the boards of all the companies with a stake in the Algerian operator.
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