CAIRO, Dec 28 - Egypt's Orascom Telecom (ORTE.CA) (ORTEq.L) said on Monday its Algerian unit had paid about $120 million against back taxes Algeria says it owes, but that it had filed an appeal and hoped to recover the amount.

The Algerian tax authority last month said the mobile telephone operator owed $596.6 million in back taxes and penalties for 2005-2007, saying it had not kept proper accounts, a charge Orascom denied.

In order to file its appeal ... Algerian law requires OTA (Orascom Telecom Algerie) to pay 20 percent of the taxes and penalties alleged to be owing,, Orascom said in an e-mailed statement. It said it made the payment on Thursday.

On Sunday, Orascom shareholders agreed to a $800 million rights issue to make up for lost dividends from its Algeria unit, which operates under the brand name Djezzy, until the tax issue is resolved.

Djezzy, which had revenue of $1.8 billion in 2007, provides Orascom with more than 50 percent of its cash flow.

Orascom runs mobile phone operations from North Africa to North Korea, and earlier this month won aproval in Canada to go ahead with a startup wireless operation called Globalive, in which it owns an indirect stake. (Editing by Anthony Barker)