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UPDATE 1-Algeria says talks started with Orascom executives

ALGIERS, May 10 (Reuters) - Algerian officials are in contact with the local unit of Egyptian operator Orascom Telecom and the next step is to talk to the firm's top executives, Algeria's telecommunications minister said. "We have direct contacts with Orascom Telecom Algeria (OTA)," Hamid Bessalah told reporters on Monday when asked about the Egyptian company's contested plan to sell its Algerian unit to South African group MTN. Asked if negotiations were planned with Orascom Telecom head Naguib Sawiris, he said: "We have started with OTA. Talks with high level officials will take place in the next step." Orascom Telecom has been in negotiations to sell some or all of its assets to MTN, a deal which could make the South African company the world's third largest mobile phone operator if all Orascom's assets were included. But Algeria is saying it wants to buy the unit, which last year accounted for about a third of Orascom Telecom's revenues. The Algerian government has not indicated how much it was prepared to pay. Shares in Orascom Telecom fell 4 percent on Egypt's bourse on Sunday on investor concerns Algeria could force it to sell the unit, which trades under the name Djezzy, for less than MTN was offering. Orascom Telecom and Algerian officials said last month they wanted talks to resolve the row, which has also seen Djezzy hit by tax demands and blocked from repatriating any profit. But until now there had been no sign of any negotiations. (Reporting by Hamid Ould Ahmed; Writing by Christian Lowe; Editing by Dan Lalor) Keywords: ORASCOM/ALGERIA (maghreb.newsroom@thomsonreuters.com; tel: +213 21727020) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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