VimpelCom seals $6 billion Wind deal
01 April 2011 |
Russian mobile operator VimpelCom has received regulatory and shareholder approval for its $6 billion merger with Wind Telecom following months of tense negotiation.
The deal, which survived determined opposition from Norwegian incumbent Telenor, a 36% stakeholder in VimpelCom, will create the world’s fifth largest mobile company by subscriber base. It is now expected to complete by the middle of the year.
VimpelCom’s purchase of Wind Telecom from Egyptian businessman Naguib Sawiris gives it 51.7% control over Orascom Telecom and full ownership of Wind Italy. The merged company will have 173 million mobile subscribers, up from the 92.5 million VimpelCom already has. This customer base is spread across 19 countries, many of them underserved emerging markets for communications such as Pakistan, Bangladesh and Burundi.
As well as integrating a diverse portfolio of assets, VimpelCom’s management must resolve a dispute with the government of Algeria, which is threatening to nationalise Orascom’s stake in the country’s mobile market to settle a dispute over tax. VimpelCom also faces the need to reduce substantial corporate debt.
“This approval by our shareholders will lead to the creation of a new global telecoms player,” said Alexander Izosimov, CEO and president of VimpelCom. “The combined group will have a significantly divsified revenue base and potential synergies estimated to be $2.5 billion on a net present value basis.”
“Even though we believe VimpelCom would have been better off without this deal, we will continue to work in the best interest of VimpelCom and its shareholders,” added Telenor’s media spokesperson Dag Melgaard.”