Hope for Orascom sale of Algerian unit

Analysts gain glimmer of hope over possible solution.

Small steps towards a solution over the sale of Orascom Telecom's Algerian unit to that country's government are giving analysts a glimmer of hope. The dispute has been brewing since May between the company and government over the sale of the unit, commonly known as Djezzy. Sean Gardiner, the head of research with Morgan Stanley in Dubai, said in a recent note the company was noting slow progress toward a deal.

Mr Gardiner added the Algerian government had still not appointed a financial adviser, which suggested the sense of urgency had waned slightly. Algeria is considering a draft law requiring foreign investors to sell their shares in Algerian companies to the state under terms established by an expert valuation and not by the market, Reuters reported yesterday. It is unclear whether Orascom Telecom would be subject to this law.

But Mr Gardiner said most of the negative news was already built into the Orascom Telecom share price and any positive developments in the short term should provide investors with a boost. The shares closed ahead 0.42 per cent to 4.78 Egyptian pounds yesterday. From an operating perspective, Orascom Telecom's management is bullish on its Tunisian, Pakistan and Bangladesh units' abilities to generate growth for the company. Egypt is expected to lag behind.

Tunisiana, Orascom Telecom's joint venture with Qatar Telecom, will remain a point of focus as the company is still looking to take it public, which should generate more cash. A domestic shareholding base would also position the company more favourably as far as political and regulatory pressure are concerned. The pending merger of Orascom Telecom with Weather Investments is also a key issue for management, as it would help the operator diversify from its Algerian exposure.

Weather, which is also controlled by the Orascom Telecom executive chairman Naguib Sawiris, owns Wind Telecommunicazioni, the third-largest mobile operator in Italy. It also operates networks in Greece and Canada. halsayegh@thenational.ae