The Russian-based telecoms group acquired a stake in Algeria’s Djezzy last year as part of its $6.5 billion deal to buy a controlling stake in Egyptian operator Orascom. The deciding price for the sale of Djezzy is still undecided, but the Financial Times reports it could be worth over $4 billion.
The resolution of the future of Djezzy, which has been subject to controversy throughout 2011 after Algeria said it wanted the mobile arm nationalised, will be seen as a major step forward for VimpelCom shareholders in integrating its other interests in the Orascom group.
Reuters newswire further reports that VimpelCom has now reached a Memorandum of Understanding with the Algerian government to establish a suitable price for the unit, with rumours circulating that VimpelCom were originally seeking $7 billion for the sale. Djezzy is considered the most valuable part of Orascom, generating annual earnings worth an estimated $1.1 billion.
As part of the expected deal, VimpelCom will remain as an operator in Algeria as it continues its strategy towards expansion in emerging markets. VimpelCom’s 51.7% stake acquisition in Orascom expanded its reach out beyond Russia and into Italy and parts of North Africa, making it the sixth largest global operator by subscriber share.
