The Algerian government could place a spanner in MTN's $9 billion plans to buy Egyptian operator Orascom.
Officials in the country's telecommunications ministry say it is opposed to the possible sale of the country's largest mobile operator. Orascom holds a 49.6% majority stake in Djezzy, the Algerian operation, which services just under 15 million subscribers.
Algeria's law allows it to veto any possible sale offer on the table, and its stern refusal to accept the deal could see the mobile business nationalised.
“The government is opposed to the planned deal between MTN and Orascom with regard to the company OTA (Orascom Telecom Algerie). Therefore, any transaction concerning OTA will be null and could lead to the withdrawal of the telephone licence granted to the company,” said the ministry in a statement to an Algerian press service.
Djezzy is Orascom's double-edged sword. Its relationship with Algiers has not been a sunny one, specifically with a dispute around a tax bill, which involves a group of companies in the Orascom family and the Algerian government.
It is also Orascom's top performer in its stable of telecoms operations, which exploded to a 67% market share in the country since its commercial opening in 2002. The company was the first mobile business to be granted a licence to provide services, followed by Kuwait's Wataniya Telecom.
MTN is keen to get its hands on the Algerian business, and analysts have said it would only take on the smaller operations like Central African Republic and Namibia if it could take up the true prize of Algeria.
MTN did not comment on what the Algerian government standoff means for the entire deal; however, it is likely a solution can be found. The latest reports indicate Algeria may change its tune, since the friction between the Egyptian company and the government could be set aside if SA bought into the business.
Africa's largest mobile operator confirmed it was in talks with Orascom early this week. It has also reportedly approached banks for $5 billion to help fund the acquisition of several units of Orascom and rumours indicate a deal is close.
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