Djezzy Deal Nears As Foreign Transfer Ban Rescinded
The Algerian government reportedly lifted a ban on fore ign exchange transfers imposed on market-leading mobile operator Djezzy . Ostensibly, the ban was employed to prevent Djezzy from buying essential equipment - such as SIM cards - from overseas suppliers. However, the state is accused of using its influence to prevent Djezzy repatriating profits to Egypt. The lifting of the ban suggests the government has wrested control of the company, or is at least close to closing an ownership transfer deal with current shareholder VimpelCom . BMI believes this sets the stage for aggressive repatriation of rival Nedjma in the near future.
Through carefully targeted price promotions and innovation in the development of value-added services , despite the technical limitations of its network, Djezzy managed to continue growing, despite the ban. It served 17.846mn subscribers at the end of 2012, up by 7.5% y-o-y and accounted for 47.6% of the Algerian mobile market. Its market share has grown steadily, from 44.7% in 2009, according to BMI 's M obile operator database .
Djezzy was already under fire from the Algerian government for alleged underpayment of taxes when, in 2010, the Orascom Telecom business - including the stake in Djezzy - was acquired by Russia-based VimpelCom. The ban on foreign exchange transfers was applied at that time and, in the months that followed, the regulator continually denied Djezzy's requests to purchase new SIM cards from overseas vendors and to significantly alter its tariffs to remain competitive and profitable. The government also said the sale of Orascom to VimpelCom was undertaken without considering the state's right of first refusal on the outstanding shares in Djezzy and entered into negotiations to buy Djezzy outright.
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