Veon to simplify structure after spending $723m on GTH

Veon to simplify structure after spending $723m on last chunk of GTH

07 August 2019 | Alan Burkitt-Gray

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Amsterdam-based Veon has succeeded in taking almost 100% control of the Egyptian company that controls operators in Algeria, Bangladesh and Pakistan.

The company announced that it now has 98.24% of the shares in Global Telecom Holdings (GTH), the former Orascom Telecom.

Veon said last night that it “is pleased with the results of the mandatory tender offer and remains committed to simplifying its corporate structure”.

Veon – formerly VimpelCom – paid $6.6 billion in 2010 to buy Orascom Telecom from Egyptian businessman Naguib Sawiris, a deal that also gave it control of Wind in Italy.

But Veon never managed to acquire the last 42.31% of the renamed GTH, giving it control of Djezzy in Algeria, Bangalink in Bangladesh and Jazz in Pakistan, but leaving it with a complex management structure at a time when Veon CEO Ursula Burns (pictured) wants to streamline the management.  

The biggest obstacle was GTH’s tax liabilities to the Egyptian government. However in June Veon announced that GTH has agreed to pay “all outstanding tax liabilities”, for a total of $136 million. At same time the Egyptian Financial Regulatory Authority approved the share offer.

Now Veon has acquired 1.9 billion shares in GTH for $587 million, a total cost, including the tax bill, of $723 million for 42% of the company – 58% of which it bought a decade ago for $6.6 billion.

Now Veon will seek the delisting of GTH shares from the Egyptian Exchange and will move “to acquire substantially all of GTH’s operating assets in Algeria, Pakistan and Bangladesh”, said the company.

Veon merged Wind Italy with Hong Kong company CK Hutchison’s Tre (Three) to create Wind Tre and in September 2018 sold its half of the joint venture. Before the GTH deal, Veon’s markets were Armenia, Georgia, Kazakhstan, Kyrgyzstan, Russia, Ukraine and Uzbekistan. Beeline in Russia is the biggest operator in the group. 

Orascom Telecom’s 75% holding in North Korea’s sole mobile operator Koryolink never moved to GTH; it is now held directly by Sawiris’s Orascom Investment Holding.