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Wed 10 Nov 2010 09:17 AM

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Arbitration 'last resort' in Algeria row - Orascom CEO

Algerian dispute won't impact merger talks with Russia’s Vimplecom - Naguib Sawiris

Arbitration 'last resort' in Algeria row - Orascom CEO
Naguib Sawiris, CEO of Orascom Telecom

Orascom Telecom, the Middle East’s largest mobile phone
operator by users, said on Tuesday it would exhaust all possibilities in its
dispute with the Algerian government, but it would pursue arbitration as a last

Naguib Sawiris, CEO of the Egyptian telco, said that
resolution of the Algerian dispute would not affect ongoing merger talks
between Orascom’s parent company, Weather Investments, and Russian mobile
operator Vimpelcom Ltd.

“We have been very transparent with VimpelCom about the
situation in Algeria and whether this deal happens or not in Algeria, the deal
with Vimpelcom will happen,” Sawiris told reporters at a conference in Dubai.

The Cairo-based operator is in dispute with the Algerian
government over allegations of outstanding back taxes, which led to a ban on
the telco transferring money abroad.

The Algerian government has also blocked a bid for
Djezzy, Orascom’s Algerian unit, by Africa’s biggest mobile-phone operator MTN

The state has expressed an interest in Djezzy, which it
has valued at around $7.8bn.

Sawiris said Orascom has sent a letter to the Algerian
prime minister outlining its concerns.

“[We] wait to hear the answer of the Algerian
government because we need to exhaust all possibilities. Then if we get a
negative reply or we don’t get a reply we will start the arbitration,” he said.

“[Arbitration] should be the last resort. If we are not
going to be invited in a civilised way to sit down, [and] a fair and square
exit, we will go to arbitration.”

Sawiris told reporters said there was a 50-50 chance the
merger with Vimpelcom would go ahead, a transaction which has been valued at
around $6.5bn.

However, he confirmed that he was not in talks with any
rival bids.

“I don't want to talk to anyone else for now,” he said.

In parallel with the resolution of these deals, Sawiris
said Orascom was eyeing acquisitions in Eastern Europe.

“We are interested in Serbia and we are interested to
look at Poland,” he told reporters, with Polkomtel SA, Poland’s largest
mobile-phone operator, and Telekom Srbija AD in Serbia believed to be the
likely targets.

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