ALGIERS: Orascom Telecom’s Algerian unit has been blocked from importing new mobile phone equipment due to an ongoing dispute with the Algerian government, a source who has dealings with the firm said.
Djezzy, the biggest single source of revenue for Egypt’s Orascom, has been unable to import mobile phone equipment since April, when the Algerian central bank stopped the company from moving money abroad, the source said.
And the import freeze now threatens to harm sales during the upcoming Muslim holy month of Ramadan, a traditionally busy period for mobile phone operators.
"Djezzy is facing tough problems as it is no longer allowed to import stuff, including SIM cards, spare parts and equipment," the source, who did not want to be identified, told Reuters.
"I don’t know how many SIM cards it still has in stock, but I do not think that it will be able to continue to meet the demand forever," the source said.
A spokesman for Djezzy declined to comment and a spokeswoman for Orascom Telecom in Cairo was not immediately available to comment.
Djezzy’s ability to import equipment is also limited by other Algerian government restrictions, which apply to all firms in the sector.
What price?
Orascom Telecom has been under intense pressure in Algeria since last year when it was hit with large tax demands. The Algerian government blocked the sale of Djezzy to South Africa’s MTN and is now in talks to buy the unit itself.
Orascom Telecom has said it is in negotiations with the Algerian state over the terms for selling Djezzy. The price the unit will fetch is the crucial issue for Orascom Telecom shareholders.
The firm’s executive chairman Naguib Sawiris told Reuters in June that before the talks with MTN were aborted, the South African company had offered $7.8 billion for Djezzy.
Algerian government ministers have refused to discuss how much they are prepared to pay, saying they await the results of an expert valuation of Djezzy.
The source with dealings with the company — and who also has contacts with senior Algerian telecoms officials — told Reuters: "They (Orascom Telecom) will be lucky if they get $1 billion."
Algerian officials still do not have a clear plan for what to do with Djezzy once they have acquired it, the source said. The options are to run it as a state enterprise, re-sell it, or allow a foreign operator to run it as a minority shareholder. –Additional reporting by Alastair Sharp in Cairo
