Egypt's Orascom Telecom may seek international arbitration to end a dispute with Algeria that is holding up its US$6.6 billion plan to sell assets to Russia's Vimpelcom.
Uncertainty over Orascom Telecom's Algeria-based Djezzy unit–its biggest revenue earner–could sink the US$6.6 billion deal, an outcome which would leave it with heavy debts.
In the letter to Algerian Prime Minister Ahmed Ouyahia and three other senior officials, Orascom Telecom Chairman Naguib Sawiris said he was making his last request to the Algerian government to stop pressuring Djezzy.
He said the unit could not continue doing business unless there was an immediate resolution to the row–which centres around tax claims and allegations of currency violations. Orascom had already incurred billions of dollars in losses, Sawiris added.
Orascom Telecom has reluctantly agreed to negotiations with the Algerian government, which says it wants to nationalize Djezzy.
But Sawiris said it was increasingly unlikely Algeria would pay a fair price–something he said he would not accept.
"We are concerned that we will be left with no choice but to seek redress through international arbitration proceedings," said the letter, which was dated 2 November.
Banking sources said that the Algerian government had said privately it would pay around US$2.5 billion for Djezzy, while Sawiris has made public reference to a previous US$7.8 billion offer for Djezzy from South Africa's MTN.
Analysts say Sawiris may consider selling off Orascom's assets piecemeal if the talks fall apart and a favorable resolution to Algeria cannot be found.
Algerian officials have said that all back-tax claims and other demands against Djezzy have been in accordance with the law, and that Algerian legislation gives it the right to nationalize the unit.