Wednesday, Mar 28, 2012

--Orascom Telecom says Djezzy to appeal Algerian court decision against it

--Court judgement relates to alleged breaches of foreign exchange regulations

--Decision consists of fines of about $1.3 billion, criminal sentence against a senior Djezzy executive

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By Shereen El Gazzar

Of ZAWYA DOW JONES

DUBAI (Zawya Dow Jones)--Egypt's Orascom Telecom Holding (ORTE.CI), or OT, said its Algerian subsidiary will appeal a court judgement handed down Wednesday against the company better know as Djezzy, as well as a senior executive there, for alleged breaches of foreign exchange regulations.

Orascom Telecom said the court decision consists of fines of about $1.3 billion and includes a criminal sentence against a member of Djezzy's senior executive team. The previously disclosed claim was lodged in 2010 by Algerian authorities.

"OTA maintains that OTA and its senior executive have acted in compliance with the law and OTA is taking the necessary steps to file an appeal. The lodging of the appeal will provisionally suspend the judgment. The management in Algeria has OTH's full support," Orascom Telecom said in an emailed statement.

Earlier this month OT said Djezzy, its biggest revenue generator, continued to face a number of challenges during the last quarter of 2011. The Bank of Algeria instructed banks not to process any overseas foreign currency transfer by Djezzy, a move OT said prevented the importation of goods which were necessary for maintenance purposes and for network capacity expansion.

Orascom Telecom and its relationship with the Algerian government has long been a rocky one. They have been locked in a long-term dispute that dates back to November 2009 when Algeria charged Djezzy with hundreds of millions of dollars in back-tax claims. In January last year, Algeria appointed law firm Shearman & Sterling to value Djezzy, in a first step to nationalize the unit.

Russian mobile operator VimpelCom Ltd. (VIP) bought, through Wind Telecom, 51.7% of Orascom Telecom in a deal worth over $6 billion in April last year. Wind is Orascom's parent company. Subsequently, VimpelCom became the main negotiator with Algeria on the sale of Djezzy.

"It [court judgment] raises questions on the Vimpelcom and Algerian government negotiations," said Karim Khadr, the head of research at Cairo-based HC-Securities.

OT shares last traded down 0.7% at EGP4.11, before being suspended pending the Algeria disclosure.

-By Shereen El Gazzar, Dow Jones Newswires, +9714 446 1684 Shereen.elgazzar@dowjones.com

Copyright (c) 2012 Dow Jones & Co.

(END) Dow Jones Newswires

28-03-12 1401GMT