Algeria Denies It's Trying to Force Orascom Out

The Algerian government has denied that it is trying to force Egypt's Orascom Telecom Holding to leave the country and says the ongoing dispute with the company is solely over taxes. The company has been disputing a US$597 million tax demand that the government imposed on its local mobile network, Djezzy. The dispute covers the the tax years 2005, 2006 and 2007.

"All the government wants is that the company pays the taxes due," Finance Minister Karim Djoudi told reporters in Algiers. "We are not pressurizing Orascom to leave the country. They are willing to pay."

Relations between Algeria and Egypt have also been strained following football violence following a football match last November.

The finance minister's comments are "positive," Sally Gerges, a telecommunications analyst at Beltone Financial, a Cairo-based investment bank, told Bloomberg News. "It removes some uncertainty regarding the future of this operation and specifically regarding the reassessed taxes."

Pending appeal, Orascom Telecom is not required to pay the full amount of the tax demand. In order to file its appeal, however, Algerian law required the company to pay 20% of the taxes and penalties alleged to be owing, approximately US$120 million. The amount paid will be recoverable if the appeal is successful.

The parent company also has US$257 million of dividends from the Algerian subsidiary frozen until the tax dispute is resolved.