Mobile operator Orascom has decided to negotiate with the Algerian government with an eye to sell its Algerian Operation, Djezzy, to the country's rulers.
Egyptian news wires say the company has sent a letter to the Algerian government initiating a possible deal to allow the government to nationalise Djezzy. There is no indication how long the deal will take, nor is there any information about a possible structure.
Djezzy has become known as the prize in the proposed MTN-Orascom deal, which would see the African mobile giant take over several African operations from the Egyptian operator. The Algerian arm is the company's best performing segment, and services some 15 million subscribers.
Orascom's decision to agree to talks with the Algerian government follows an announcement this week by the country's officials saying they will not allow the sale of Djezzy to MTN. The news came after SA's deputy minister of trade and industry, Bongi Maria Ntuli, appealed to the Algerian government to keep the deal alive and smooth the way for MTN.
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.
Algeria's blockade and the letter from Orascom may not be the end of MTN's plans to pick up on the North African business. Speculation earlier this year was that the Algerian government could buy up Djezzy, only to sell it to MTN later, at a higher price.
Analysts say governments tend not to run operations like this, and certainly not as well as private businesses can. With MTN's African record already holding it in good stead, analysts say it is possible that Algeria is just upping the ante.
However, they agree it will entirely depend on how desperate MTN is to get its hands on the operation in Algeria.
Algeria would have been MTN's foothold in North Africa, bridging the gap between its other African operations and its work in Iran. MTN's past deal discussions have seen it turn its back on heavy regulatory issues, evident in its dealings with Indian operator Bharti Airtel last year.
Despite the ructions, MTN has not withdrawn the cautionary it released on the Johannesburg exchange a few weeks ago, which could mean it is looking for a solution to the problem.
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