Orascom Telecom asked to pay Algeria $596m

Egypt's Orascom Telecom has been told by Algerian tax authorities that it owes $596.6 million in outstanding taxes and penalties, and will challenge that decision, the company said on Wednesday.

Orascom said the Algerian tax demand was based on an "unfounded and unacceptable allegation" that it did not keep proper accounts in 2005-2007. It added the tax claim could reduce 2010 dividends from its Algerian unit.

The Cairo-based international mobile operator said it would "take all necessary legal steps" to challenge the tax reassessment, adding that the accounts of its Algerian subsidiary had been approved by both international and local statutory auditors.

"OTH (Orascom Telecom Holding) is confident in its ability and experience to mitigate this risk of a possible reduced liquidity position in an efficient manner to meet all its obligations as it did in the past," Orascom said.

"This tax claim may reduce the amount to be distributed as dividends in 2010 from OTA's (Orascom Telecom Algeria's) 2009 net results," it said.

Orascom Telecom says that its subsidiary serves over 14.5 million mobile telephone customers in Algeria, giving it a 63.7 percent market share. It acquired a 15-year mobile telephone license in Algeria in 2001 for $737 million.