Vimpelcom joins global cellco top five with Orascom deal
Pays $6.8bn for control of Orascom and Wind Italy
Published: 5 October, 2010
READ MORE: M&A | Africa & Middle East | VimpelCom | Orascom Telecom
The new breed of super-cellcos is emerging, and Russia's Vimpelcom is set to join Bharti and MTN among the 'twenty first century Vodafones', with activities spanning several continents. Vimpelcom has confirmed a $6.8bn deal to gain control of Egypt-based Orascom and the Italian third cellco Wind, both controlled by Egyptian billionaire Naguib Sawiris.
The deal makes the Russian giant the world's fifth largest mobile operator, with market
Orascom has had more success in finalizing terms this time than it did with South Africa's MTN, whose own merger negotiations for Orascom's African units collapsed earlier this year, mainly over a disputed valuation for the highly profitable Djezzy, Orascom's Algerian business.
While Orascom's major operations are in Algeria, Egypt and Uganda, plus Bangladesh and Pakistan, Vimpelcom has non-Russian activities in Ukraine and other former Soviet states, plus Cambodia and Vietnam.
Meanwhile, the break-up of Kuwaiti powerhouse Zain is helping several players build their mobile empires. Etisalat of United Arab Emirates last week confirmed a $12bn bid for a 46% stake in Middle East group Zain, which has already sold its sub-Saharan African activities to Bharti Airtel. Now another Gulf cellco, Qtel (Qatar Telecom) has emerged as a likely buyer for Zain Saudi Arabia.
This could clear the way for Etisalat - in a research note, Bahrain bank Sico said an Etisalat deal that included Saudi Arabia could be blocked, as it has existing operations in the kingdom. A merger of the UAE firm's Saudi mobile arm, Mobily, and Zain "seems unlikely" since it would violate merger guidelines in Saudi Arabia's Telecom Act, Sico said, gaining about 55% market share.
Zain Saudi Arabia paid $6bn for its license in 2007 and has built a customer base of 7m in just two years. Its far larger rivals are Mobily and Saudi Telecom's STC. The network recently announced plans to raise $1.2bn through a rights issue to fund network expansion.
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