The Amsterdam-based group agreed the sale in July 2021, though the price was not stated at the time.
Fonds National d’Investissement (FNI), Algeria’s National Investment Fund, had already controlled Djezzy’s holding company, Omnium Telecom Algérie, since 2015, when it paid $2.643 billion for 51% after a 10-year battle between the then owner and the government.
This means Veon will have received a total of $3.3 billion for its whole interest in Djezzy.
Group CEO Kaan Terzioğlu (pictured) told Capacity this morning: “Djezzy has been a success story in many ways. We have benefited from an excellent team in Algeria led by Matthieu Galvani and our thanks go to him and his colleagues. We also have an excellent relationship with the Algerian government, which has been our partner in the growth of Djezzy.”
But he offered some criticism of Algeria. “The market has not provided us with the regulatory freedom that we need to pursue Veon’s digital operator strategy. Our focus is on markets where young and growing populations are underserved by 4G and advanced digital services that we can bring to them,” he told Capacity.
Terzioğlu says more about Veon’s investment strategy in an interview to be published in the August/September issue of Capacity magazine.
He said the other factors Veon takes into consideration are “tower infrastructure ownership and opportunity to run an asset-light business, as well as spectrum availability and pricing flexibility so that we are able to deliver on our strategic goals”.
Terzioğlu told Capacity: “If that is not possible within a certain country then it is not right for us. We regularly evaluate our portfolio and may engage in investment or divestment activity when attractive opportunities arise that we believe will create value for Veon stakeholders.”
Since he joined Veon, firstly as joint COO in October 2019, the group has exited from three markets – Armenia and Georgia, and now Algeria. He explained the portfolio strategy: “We look for large populations and underserved needs. … Armenia and Georgia are basically beautiful markets. But they were too small for our general operating policy.”
Veon announced the sale of its operations in the eastern European nation of Georgia in June 2022 to its former local partner for just $45 million.
The buyer was Khvicha Makatsaria, a Georgian businessman and a former minority shareholder in Beeline Georgia: Beeline is the brand Veon uses in several of its operations.
Terzioğlu said then: “After a period of ongoing negotiations, we have successfully concluded an agreement for the sale of our operating subsidiary in Georgia to our former local partner. This transaction is another step towards streamlining our group operations.”
This was two years after the sale of its operations in Armenia for $51 million.
Veon said today that the cash received from this transaction further strengthens its liquidity position, which it has been keen to emphasise for most of the year. Almost two-thirds of its 2021 revenue came from two countries now at war: Russia, which provided 52%, and Ukraine, which provided 13%.
As of 4 August 2022, the group’s total cash and deposits have increased to $3.1 billion, including $2.5 billion equivalent of US dollar and euro-denominated cash and deposits held by the headquarters in Amsterdam.
According to the Africa Report last year, the dispute over the Algerian operation dates back to 2010, when Egyptian businessman Naguib Sawiris decided to sell Orascom Telecom Algérie, which had operated in Algeria since 2002 under the name Djezzy.
Algeria blocked a planned sale of Djezzy to South African company MTN and put in a claim for €600 million in allegedly unpaid taxes.
Sawiris instead sold a stake to what was then VimpelCom – now Veon – and sued Algeria for $4 billion in an international arbitration tribunal. He lost that case two years ago, and also sold his international Orascom Telecom operations, by then called Global Telecom Holding, to Veon – also a messy transaction.
