Djezzy is a strong performer

Russian carrier VimpelCom said Monday it has agreed to sell a majority stake in its lucrative Algerian unit, Djezzy, to the Algerian state for an undisclosed sum.

The move would end an ongoing dispute over ownership of the asset, involving companies from three countries. VimpelCom bought Djezzy in 2011 as part of a $6bn acquisition of Egyptian carrier, Orascom Telecom’s holdings, but the deal was hampered by calls from the Algerian government to nationalise the telco.

VimpelCom owns 51.7 per cent of Orascom, which in turn owns 96.81 per cent of Orascom Telecom Algeria, the holding company behind Djezzy.

Should a suitable price be agreed upon, it is expected the Algerian state will take 51 per cent of Djezzy, leaving VimpelCom with an interest in the business and still able to consolidate Djezzy into its financial results.

The funds, which may be in the region of $3bn to $4bn, would help VimpelCom pay down its massive debt pile.

Alexander Izosimov

The chief executive of second-placed Russian carrier VimpelCom, Alexander Izosimov, is to step down at the end of June. Izosimov will be leaving on a high, having engineered the somewhat controversial merger with Orascom Telecom parent Weather, which created the world’s fifth largest mobile carrier.

A statement points out that Izosimov’s tenure as CEO started in 2003 but neglects to mention the 13 months or so when ex-Telekom Austria chief Boris Nemsic took the helm between April 2009 and June 2010. Nemsic evacuated his post rather abruptly, amid suggestions he hadn’t been planning his resignation, as the firm reorganised itself into four new business units; Russia, Ukraine, CIS and International and Izosimov took up captaincy once again.

In this instance, current chairman, Jo Lunder, has been elected as the new CEO of VimpelCom, taking over from Izosimov at the end of June.

VimpelCom

How does this article affect your perception of VimpelCom? What is this?

VimpelCom is 26.6% negative

Total votes: 30

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Russia's answer to Carphone Warehouse is set to float on the LSE

Russian mobile phone retailer, Euroset, which claims to sell three out of every ten phones in Russia, is to launch on the London Stock Exchange. The fundraising target is said to be in excess of £620m, putting a value of between £1.8bn and £3.1bn on the company, which operates over 4,300 shops in Russia.

The flotation is reported to be planned for April, with most of the shares on offer said to be those belonging to former Yeltsin advisor-turned-oligarch Alexander Mamut, who holds a 50.1 per cent stake in the retailer. According to Reuters, “sources close to the deal” believe that Mamut is prepared to sell his entire stake if the price is right.

Russia’s third-placed mobile operator, Vimpelcom (which recently merged with Wind Telecom under controversial circumstances) holds the remaining 49.9 per cent stake. The operator has said that “intends to continue to be a shareholder” in Euroset, which doesn’t disclose handset sales but posted a profit of RUB5.6bn (£121m) in 2010.

Telenor was unable to prevent the VimpelCom-Wind deal from going ahead

Shareholders in Russian operator VimpelCom have voted in favour of a $6bn merger with Wind Telecom.  Despite strong  opposition from major shareholder Telenor, more than 53 per cent of voters supported a deal that will see the creation of the world’s fifth largest mobile company by subscriber base.

Under the deal, the telecom assets of Egyptian billionaire Naguib Sawiris have been acquired, bringing with them a series of challenges, not least in Algeria, where the possiblity of nationalising Sawiris’ assets (including Orascom) will almost certainly bring about lengthy negotiations. Other speedbumps include the integration of holdings in 15 emerging markets as well as Canada and Italy, an ongoing legal battle with Telenor and a need to reduce debts.

The merger decision comes on the back of months of legal wrangling with Norway’s Telenor which, despite its 36 per cent stake in VimpelCom, was unable to exert influence over the minority shareholders, the majority of whom supported 44.6 per cent stakeholder Alfa Group’s (Altimo)  favouring of the deal. According to VimpelCom, the transaction will be completed by the first half of this year. Despite losing the battle, Telenor spokesman Dag Melgaard said on Thursday that it remained committed to its investment in VimpelCom, “even though we believe [it] would have been better off without this deal.”  Previously, Telenor had stated its belief that neither the original merger proposal nor a revised one made financial or strategic sense and that the terms were overly generous to the owners of Wind.

Through the deal, VimpelCom will own, through Wind Telecom, 51.7 per cent of Orascom Telecom and 100 per cent of Wind Italy. The enlarged company will operate in 19 countries with more than 173 million mobile subscribers.

VimpelCom

How does this article affect your perception of VimpelCom? What is this?

VimpelCom is 26.6% negative

Total votes: 30

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Telenor said that it will try to stop the transaction from being completed

Telenor and VimpelCom are still slugging it out over the Russian player’s proposed acquisition of Wind Telecom, part of Egyptian billionaire Naguib Sawiris’ Weather Investments vehicle and owner of Orascom.

On Monday, as VimpelCom’s supervisory board gave its final approval for a merger with Wind, Telenor said that it will try to stop the transaction from being completed.

Should the deal go ahead, VimpelCom will own, through Wind Telecom, 51.7 per cent of Orascom Telecom and 100 per cent of Wind Italy, creating the world’s sixth largest mobile carrier by subscribers. The enlarged company would operate in 19 countries with over 173 million mobile subscribers.

VimpelCom has called a shareholder meeting for March 17 to consider the approval of the deal, which would give the owners of Wind Telecom a 30.6 per cent voting stake in VimpelCom.

But Telenor’s three nominees on the VimpelCom board have voted against the approval of the acquisition because they do not believe it makes strategic or financial sense for VimpelCom and will harm VimpelCom’s shareholders. Telenor holds a 36 per cent voting and 39.6 per cent economic interest in VimpelCom.

“We did not support the original proposal because it did not make strategic or financial sense.  The revised proposal makes even less sense as the consideration now being offered is even more generous to the owners of Wind Telecom. Existing VimpelCom shareholders face considerable additional dilution if this acquisition is completed on the terms approved by the board,” said Telenor spokesman Dag Melgaard.

“As a result of this transaction, VimpelCom minority shareholders’ existing 18.6 per cent voting stake will be diluted to 12.9 per cent, despite their having an economic stake of 16.3 per cent.  In our view, the disconnect between economic and voting stakes negatively affects the attractiveness of VimpelCom as an investment case for public investors,” Melgaard said.

Telenor

How does this article affect your perception of Telenor? What is this?

Telenor is 100% positive

Total votes: 1

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VimpelCom

How does this article affect your perception of VimpelCom? What is this?

VimpelCom is 26.6% negative

Total votes: 30

38 11 30 7c7e63c5d5 0

Telenor’s voting stake in VimpelCom is 36 per cent so, if it is the lone voice in opposition to the move, it will be unable to block the deal. VimpelCom’s supervisory board is scheduled to meet for two days in the near future to vote on final approval for the deal, the Russian firm said.

The deal was first announced in October and, if successful, will create the world’s fifth largest mobile telecommunications carrier by subscriber numbers. The merged entity would boast 174 million mobile subscribers spread over 20 countries in Europe, Asia, Africa and North America, with pro forma net operating revenues of $21.5bn.

Under the proposed deal, VimpelCom will pay out $1.8bn in cash to shareholders in Weather, in exchange for ownership of 51.7 per cent of Orascom and 100 per cent of Italian player Wind Telecomunicazioni. VimpelCom shares will also be issued to Weather shareholders representing a 20 per cent economic interest and an 18.5 per cent voting interest in the enlarged VimpelCom group.

When the deal was announced, Alexander Izosimov, CEO of VimpelCom, said:  “It offers our shareholders exposure to attractive growth markets in both Asia and Africa and the opportunity to diversify further our revenue base in terms of geography, currency and market characteristics. It also positions VimpelCom to take full advantage of the significant opportunities that we see in the fast-growing mobile data services market and to leverage the experience that already exists in this area within Wind Italy and other parts of the Weather group.”

The deal will create the world’s fifth largest mobile carrier by subscribers

Russia’s second biggest operator, VimpelCom, has merged with Egypt-based Orascom Telecom and investment vehicle Weather Investments, creating the world’s fifth largest mobile telecommunications carrier by subscribers.

The new entity will boast 174 million mobile subscribers spread over 20 countries in Europe, Asia, Africa and North America with pro forma net operating revenues of $21.5bn.

Under the deal, VimpelCom will pay out $1.8bn in cash to shareholders in Weather, in exchange for ownership of 51.7 per cent of Orascom and 100 per cent of Italian player Wind Telecomunicazioni. VimpelCom shares will also be issued to Weather shareholders representing a 20 per cent economic interest and an 18.5 per cent voting interest in the enlarged VimpelCom group.

Certain assets, primarily Orascom’s units in Egypt and North Korea, will be transferred to the current Weather shareholders and Greek operator Wind Hellas Telecommunications is entirely excluded from the transaction.

The ownership structure of VimpelCom is complicated and upon issuance of new VimpelCom shares, Telenor and Altimo Holdings & Investments will hold 31.7 per cent and 31.4 per cent of the economic rights and 29.3 per cent and 36.4 per cent of the voting rights, respectively, of VimpelCom. Minority shareholders in VimpelCom will represent 17 per cent of the economic rights and 15.7 per cent of the voting rights.

Weather will designate two members to an enlarged VimpelCom board of eleven members, while Telenor and Altimo will each continue to designate three board members. Synergies between VimpelCom and Weather’s operations are estimated to deliver savings of $2.5bn derived from procurement opex and capex.

The Orascom Telecom assets intended to be demerged include the 34.7 per cent stake in the Egyptian Company for Mobile Services (ECMS) held 20 per cent directly and 14.7 per cent indirectly via MobiNil Telecommunications; the 75 per cent stake in Koryolink in North Korea and certain sub-sea cable and internet portal operations. The Wind Italy assets to be demerged include the Libero internet portal, Wind International Services wholesale carrier subsidiary and the operation of a sub-sea cable between Italy and Greece.

Naguib Sawiris, chairman of Weather, said: “We share a common vision with our new partners at VimpelCom of the exciting prospects of our new, enlarged and diversified telecoms platform. Moreover, I am confident that our minority shareholders in Orascom Telecom will benefit from the synergies created by the combination of the two entities, especially in the area of procurement, and by the overall strengthening and de-risking of the Orascom Telecom balance sheet.“

Alexander Izosimov, CEO of VimpelCom, said: “. It offers our shareholders exposure to attractive growth markets in both Asia and Africa and the opportunity to diversify further our revenue base in terms of geography, currency and market characteristics. It also positions VimpelCom to take full advantage of the significant opportunities that we see in the fast-growing mobile data services market and to leverage the experience that already exists in this area within Wind Italy and other parts of the Weather group.”