Vimpelcom buys Orascom and Wind
15 November 2010 |
Russian operator Vimpelcom has agreed to acquire most of the telecoms assets of Egyptian billionaire Naguib Sawiris in a $6.5 billion deal, creating the world’s fifth largest mobile network operator (MNO) by subscriber base.
Jo Lunder, chairman, Vimpelcom
The new operation, which unites Vimpelcom, Orascom and Italian firm Wind Telecomunicazioni, will have 175 million customers, split mainly between two economically-emerging blocs – the former Soviet Union and the Arabic-speaking world. The deal follows a protracted period of negotiations between Vimpelcom and Sawiris’ Weather holding company, which had earlier this year been forced to abandon similar talks with South African operator MTN Group.
Sawiris is establishing a new company to manage his remaining telecoms assets. Provisionally called Orascom Telecom 2, it will include his share in Egyptian MNO Mobinil and a venture in North Korea, but not Greek operator Wind Hellas, the creditors of which have taken control of the firm after agreeing a €420 million cash injection.
The fate of Orascom’s Algerian unit, branded Djezzy, has still to be settled. When Weather announced its intention to seek a buyer, Algeria’s government insisted on first refusal on the purchase of Djezzy, alleging that the nationalisation of the unit was necessary in order to recover unpaid taxes. Vimpelcom has now opened talks with the Algerian government, and at the time of Capacity going to press was in the process of negotiating a fair valuation for Djezzy.
“This combination [of Weather and Vimpelcom] creates a top tier global telecoms company with strong platforms across Europe, Asia and Africa,” said Jo Lunder, chairman of Vimpelcom. “We are confident that this transaction will create significant long-term value for all our shareholders.”
Sawiris said that Weather’s smaller units would now benefit from the synergies and economies of scale created by the combination of the two entities: “They will especially gain in the area of procurement, and by the overall strengthening and de-risking of the Orascom Telecom balance sheet,” he said, in a reference to the company’s high level of indebtedness that has hampered recent moves to grow further.
The Weather purchase is Vimpelcom’s first move outside its home market and its first major announcement following the resolution of differences between its Russian and Norwegian shareholders.
15h | James Pearce
15h | James Pearce
15h | Alan Burkitt-Gray
16h | Alan Burkitt-Gray