Slow start for Algerian mobile telephony


Ten years after Algeria's mobile phone industry was opened up to the private sector, the market still remains fragile.Two private-owned networks have been embroiled in a string of crises.

Market leader Djezzy, a subsidiary of Orascom Telecom, was taken over by the Russian-Norwegian company VimpelCom in 2011. The company boasts over 16 million subscribers, while its rival Nedjma has nine million customers. Eleven million Algerians are subscribed to state-owned operator Mobilis.

Following Djezzy's example, Nedjma, a subsidiary of Kuwaiti group Wataniya Telecom, has decided to change hands by offering itself to the Qatar-based Qtel group. Both deals have greatly irritated the Algerian authorities.

If Nedjma sold the remainder of its shares to Qtel, the government would exercise its pre-emptive right to acquire the company, Finance Minister Karim Djoudi said on September 11th. "If Qtel takes over Wataniya completely, that will be a change of ownership, and if there is a change of ownership, there's a rule that applies: 51%/49%," he explained.

In March 2007, Qtel became a controlling shareholder with a 51% stake in Wataniya Telecom, which allowed the Qatari company to take a 80% stake in Nedjma. Qtel, which aims to become the number one operator across the Maghreb, made a takeover bid to become the sole owner of the Kuwaiti group.

The pre-emptive right is a mechanism that was created under 2009 Supplementary Finance Act. It gives the Algerian government the right to buy whenever stakes are transferred to or from foreign shareholders. Meanwhile, a different crisis, involving market leader Djezzy, has been brewing in Algeria.

The company was accused of infringements worth of $189 million between 2007 and 2009 when its capital was transferred abroad. Djezzy was taken over by VimpelCom in 2011, which holds 51% of the shares. The foreign company refuses to sell its stakes to the Algerian government unless an "acceptable" price is offered.

Djezzy's value is estimated at 6.5 billion dollars. The foes of the company have accused it of monopolising the market. In July, Mobilis CEO Saad Damma called on the Post and Telecommunications Regulatory Authority (ARPT) to intervene in order to balance the market and prevent one operator from becoming dominant.

"The role of the ARPT is to ensure that there is fair competition between operators," ARPT chief Zohra Derdouri said on July 30th. Its goal "is not to prevent dominance, which would be tantamount to stifling competition, but to suppress the banned practice of abusing a dominant position."

Derdouri added that her organisation seeks to ensure that no product offered for sale can destabilise the market. This statement has not allayed people's fears and the market remains fragile, a decade after it was opened up to the private sector.

The unresolved conflict has prevented the telecommunications ministry from deploying the 3G mobile system. The award of the 3G license has been put on hold, pending the outcome of the Djezzy affair.

"The [3G] project is ready, but the government is delaying out of a desire to be fair to Djezzy." The issue is taking a long time to be sorted out," Minister of Post and Telecommunications Moussa Benhamadi told the press in February.