The Algerian government will not allow MTN to take over Orascom's Algerian operation Djezzy, which could see MTN call off the entire deal.
The news comes after SA's deputy minister of trade and industry, Bongi Maria Ntuli, appealed to the Algerian government yesterday to keep the deal alive and smooth the way for MTN to take up the business.
Algeria's minister of commerce, Hachemi Djaaboub, says he has told the deputy minister that the deal will not go through. “The Algerian government, which still holds its right of pre-emption, disapproves the sale of Djezzy to a foreign operator. So, the South African firm MTN is not authorised to engage in negotiations with Orascom with a view to a possible takeover,” he explains.
The news will come as a blow to MTN, which started discussions with Orascom in April to take up several African operations including the one in Algeria. If the country's government exercises its pre-emptive rights, Djezzy could be nationalised instead.
Of the several countries that MTN hopes to get, Algeria sports the largest opportunity, carrying traffic for around 15 million subscribers.
Djezzy is 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.
However, Algerian officials have never been in favour of the deal, and analysts suspect that if MTN doesn't have a shot at the business, it may walk away from the entire deal. Bad relations between Egypt and Algeria have been blamed as the reason Algeria is not happy to allow Orascom to sell the business.
The other North African countries which are likely being discussed as part of the deal include Tunisia with 4.8 million subscribers and Egypt with 24 million people on its network, making them all attractive targets.
MTN has not yet issued a statement on the matter.
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