Orascom Telecom surges as investors speculate the egyptian operator will be able to sell off its Algerian asset, Djezzy.
Orascom rises on talk of Algerian unit sale
Orascom, Egypt's top telecommunications provider, rose 9.5 per cent to 4.24 Egyptian pounds a share and was the most actively traded stock on the exchange.
The company's shares have surged on positive response to Orascom adding a major new shareholder. Two weeks ago, Russia's VimpelCom approved issuing shares for a merger with Wind Telecom, which has a controlling stake in Orascom. Under the terms, VimpelCom will then own Wind Telecom and its 51.7 per cent in stake in Orascom.
Separately, Orascom continues to search for an operator to buy its Algerian asset, Djezzy, after an effort by the Algerian government to nationalise the company.
Investors say Orascom could get close to fair market value if it sold Djezzy to another operator, while the Algerian government would offer a much lower price.
The state-run news agency APS reported yesterday Algeria had ruled out the involvement of VimpelCom in its talks to buy Djezzy.
"Orascom Telecom is the only one negotiating with Algeria on Djezzy," said the Algerian finance minister Karim Djoudi.
In a note to clients, Alembic HC Securities said: "The comment from the minister is confirmation that the Algerian government is still interested in nationalising Djezzy and is a clear message to the market that they will not change their position on the deal despite the VimpelCom-Wind merger."
But analysts observed the resilient performance of Orascom's global depository receipts (GDR) in London indicate at least some investors believe it can close the deal with another operator.
"The GDR price, up 26 per cent in the past two days, is reacting to speculation that the Algerian government will not buy Djezzy," the Alembic note added.