UPDATE 2-Algeria valuing Orascom unit, Vimpelcom deal eyed

* Valuation commission to be led by Algerian accountant

* Commission to report Djezzy findings within two months

* Orascom chairman says focused on resolving Algeria issue

* Shares in Orascom close down 1.5 percent

(Recasts with Algeria to price Orascom unit, adds analyst)

By Lamine Chikhi and Alexander Dziadosz

ALGIERS/CAIRO, Aug 31 (Reuters) - Algeria should announce within two months what it will pay for Orascom Telecom's (ORTE.CA) Djezzy unit, a source said on Tuesday, a step that may open the way for Orascom's owner to merge with Vimpelcom (VIP.N).

But news the Algerian commission valuing the unit would be state appointed and did not appear to include international experts lowered expectations the Egyptian mobile firm would get a good price for the money spinner Djezzy, pushing shares down.

Orascom Chairman Naguib Sawiris told a newspaper his holding company Weather Investments, which owns just over half of Orascom, was talking to Vimpelcom, his first public confirmation of talks that could create a company worth some $25 billion.

An earlier attempt by Sawiris to sell assets to South Africa's MTN (MTNJ.J) fell through when Algeria blocked the sale of Djezzy and analysts say what happens in Algiers could determine the fate of the Vimpelcom merger negotiations too.

"We have two things on our agenda right now -- solving the Algerian issue and, second, finding a good partner for the group," Sawiris told Canada's The Globe and Mail in an article posted on its website late on Monday.

Sawiris, whose telecoms assets stretch from North Korea to Europe to Canada, has for years predicted a consolidation of the global telecoms industry and said he wanted to be a part of it.

"We are not only talking to them, we are talking to anybody," Sawiris said in reference to Vimpelcom merger talks.

A Weather spokeswoman did not comment directly on the report but said the firm had been seeking a partner for over a year.

Shares in Orascom, which is just over 50-percent owned by Weather, closed down 1.5 percent at 5.29 Egyptian pounds ($0.93) per share, valuing the company at about $5 billion.

Brokers said the share price was unlikely to rise significantly until more official news about the talks with Vimpelcom and the Algerian government was released.

RESOLUTION

Orascom agreed to negotiate the sale of Djezzy to Algeria more than three months ago, but there has been scant sign of progress towards a sale and no clarity on how the sale price will be fixed. [ID:nLDE65005O]

The source in Algeria, who is close to the telecoms ministry, confirmed a report in El Khabar newspaper which said the commission would start work in the second week of September and would report its findings within two months. [ID:nLDE67U0VZ]

The commission valuing the unit will be led by an Algerian accountant and there was no sign of involvement from international financial experts, a factor analysts have said could drive down the sale price.

CI Capital analyst Amr Elalfy said news the evaluation would take only two months was positive, but the report suggested it was unlikely the government would offer a price for Djezzy in the range of the $7.8 billion Sawiris said MTN had offered.

"The fact that they're going to take a shorter period of time to finalise a valuation doesn't mean a deal will be done, and it doesn't mean OT (Orascom Telecom) will agree with the valuation they come up with," he said.

A resolution in Algeria could make a deal with Vimpelcom more likely, he added. "Assuming they agree on the price, it's just a matter of the Algeria situation," he said.

An official with the Algerian finance ministry, which has been closely involved in the Orascom Telecom case, declined to comment when contacted by Reuters. An Orascom spokeswoman also declined to comment on the Khabar report. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For a TIMELINE on Sawiris's attempts to sell assets:

[ID:nLDE67U0TU]

Q&A on Sawiris's talks with Vimpelcom:

[ID:nLDE67F0N6] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

($1=5.706 Egyptian Pounds) (Additional reporting by Stephen Jewkes in Milan; Additional writing by Christian Lowe; Editing by Edmund Blair, Mike Nesbit)