Orange Business Services highlights strategic focus on Middle East region at conference in Oman
Orange Business Services, the B2B arm of France Telecom-Orange and one of the largest ICT employers in the Middle East, has identified the Middle East as a strategic region for the next five years. The company is focusing on the opportunities presented by smart cities, cloud computing and the development of the enterprise services market.
This strategy was presented during the annual Eastern Europe, Middle East and Africa (EEMEA) regional meeting held in Muscat. Customers and partners joined more than 200 senior Orange Business Services staff representing 80 countries.
Philippe Koebel, Senior Vice President and Head of Emerging Markets for Orange Business Services, said: Orange Business Services has all of the necessary needed assets in the region to contribute to our strong business ambition in the emerging markets of generating 1 billion euros in revenue by 2015. We offer a full range of solutions from various local network access options through Business VPN up to telepresence, unified communications and fully connected smart cities. With 2,000 regional staff, five regional offices, a major service center, and two Orange labs, Orange Business Services is well equipped to meet the needs of our customers whether simple or complex.â€
Orange Business Services is a smart city pioneer, delivering telecommunications infrastructure solutions to cities that provide ubiquitous IP-based infrastructure and connectivity, backed by innovative related ICT services, including voice solutions, business and on-demand connectivity, public Wi-Fi and state-of-the-art security.
2010 proved to be a successful year for Orange Business Services in the region with 10 major new clients added and a range of high profile smart city project wins. Orange Business Services supports more than 500 multinational customers in EEMEA, including: BHP Billiton, Ecobank, Lafarge, MAF Carrefour, Omantel, South African Breweries, and United Arab Shipping Company (UASC).
To address the cloud computing demand, Orange Business Services appointed its first Middle East & Africa Regional Cloud Director in August 2010 and, along with Cisco, EMC and VMware, announced Flexible 4 Business to offer end-to-end cloud computing services for enterprises.
Smartphones to drive enterprise data plan revenues to $102 bn in 2016
A new research has revealed that mobile data plan revenues will grow at a compound annual growth rate (CAGR) of nearly 9% and are expected to exceed $102 billion worldwide by 2016.
Regionally, data plan revenue share among different device classes varies significantly. Currently in North America, data plans for smartphones deliver the lion’s share of revenue. However in regions lacking fixed line access such as Eastern Europe and Latin America, connections to other computing devices constitute the majority share. By 2016, smartphones will become the largest portion of each region’s mobile data plan revenues with over 50% share.
Increasing smartphone penetration rates among mobile enterprise customers are major drivers for data plan revenue growth. The connectivity for other devices such as tablets will become increasingly important and contribute significantly to overall connectivity revenues from the business sector.
Data plan growth portends other opportunities for the enterprise sector. More connections mean greater need for applications, content, security, expense and other mobile device-related services. Forward-looking enterprise segment suppliers are looking holistically at the opportunities presented by increasing enterprise mobile device connections.
VimpelCom Supervisory Board Approves New Terms for Combination With WIND TELECOM S.p.A.
VimpelCom Ltd. announced today that VimpelCom’s Supervisory Board gave its final approval for the proposed combination of VimpelCom and WIND TELECOM S.p.A. (“Wind Telecom”, formerly Weather Investments S.p.A.). Six of nine directors, including all three independent directors and the three Altimo-nominated directors, voted in favor of the Transaction, with the three Telenor-nominated directors voting against the Transaction.
Following completion of the Transaction, VimpelCom will own, through Wind Telecom, 51.7% of Orascom Telecom Holding S.A.E. (“Orascom Telecom”) and 100% of WIND Telecomunicazioni S.p.A. (“WindItaly”). The combination of VimpelCom and Wind Telecom, as previously announced on 4 October 2010, will create the world’s sixth largest mobile telecommunications carrier by subscribers with pro forma adjusted net operating revenues of US$21.3 billion and pro forma EBITDA of US$9.4 billion for the year ended 31 December 2009.
The management and the Supervisory Board continue to believe strongly in the strategic rationale of the Transaction which will create a new global telecom player with significant scale and an attractive mix of developed and emerging market assets, well-positioned to realize profitable growth.
Jo Lunder, the Chairman of VimpelCom’s Supervisory Board, commented: “VimpelCom’s Supervisory Board is pleased to approve this transaction. This combination will create a top-tier global telecoms company and should drive significant value for all our shareholders. While we acknowledge Telenor’s divergent view, we believe that the majority of our shareholders recognize the strategic and financial merits of this transaction. In the end, as it should be with a public company, it will be the special general meeting of shareholders that will make the final determination.”
Alexander Izosimov, Chief Executive Officer of VimpelCom, added: “We have made substantial progress since we announced this transaction last October and we remain on track to close in the second quarter of this year. We continue to believe that this transaction offers our shareholders exposure to attractive growth markets 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.”
Transaction rationale
The combination of VimpelCom and Wind Telecom will create a new global top-tier telecom operator, which is expected to lead to substantial value creation for shareholders, both in the short and long term. The combination is consistent with the original objectives announced by our strategic shareholders when creating VimpelCom Ltd., namely to increase the current scope of operations and scale of the business.
The enlarged company will operate in 19 countries around the world, covering a population of 838 million people, with over 173 million mobile subscribers.
VimpelCom’s revenue base will be significantly diversified. Based on 2009 pro forma revenues, the existing operations in Russia and Italy will each account for approximately 35% of the combined company. The group will also have an attractive mix of developed and emerging market assets in Eastern Europe, Asia and Africa. In addition, the combined group will benefit from a more balanced growth profile between increasing market penetration and growing usage, in particular in mobile data services, across its portfolio, resulting in a robust and diversified cash flow and currency structure.
The Transaction is financially attractive and offers good value creation for shareholders, in particular taking into account that the equity consideration represents a relatively small proportion of the total enterprise value. The implied EV/EBITDA multiple is low compared to recent precedent transactions in the telecoms sector. In addition, the Transaction preserves the Company’s dividend payout commitment.
Finally, there is significant potential for value creation from synergies between VimpelCom and Wind Telecom operations, with an estimated net present value of US$2.5 billion. These synergies will be primarily derived from procurement operational expenses and capital expenses.
Transaction terms
Under the new terms of the Transaction, Wind Telecom shareholders will contribute to VimpelCom their shares in Wind Telecom in exchange for consideration consisting of 325,639,827 newly-issued VimpelCom common shares, 305,000,000 newly-issued VimpelCom convertible preferred shares and US$1,495 million in cash. The newly-issued convertible preferred shares will have the same rights as the existing convertible preferred shares. In addition, at or shortly after the closing of the Transaction, certain assets will be demerged from the Wind Telecom group and transferred back to Weather Investments II S.a.r.l., the 72.65% shareholder of Wind Telecom (“Weather II”), as further described below.
The VimpelCom common and convertible preferred shares issued to Wind Telecom shareholders at the closing of the Transaction will together represent approximately a 20.0% economic interest and a 30.6% voting interest in the enlarged VimpelCom group. Upon issuance of the new VimpelCom common and convertible preferred shares, Telenor ASA, holding through its subsidiaries Telenor Mobile Communications AS and Telenor East Invest AS (“Telenor”), and Altimo Holdings & Investments Limited, holding through its subsidiary Altimo Cooperatief U.A. (“Altimo”), will hold approximately 31.7% and 31.4% of the economic rights and 25.0% and 31.0% of the voting rights, respectively, of VimpelCom. Minority shareholders in VimpelCom will represent approximately 17.0% of the economic rights and 13.4% of the voting rights.
Algerian value sharing arrangement
Notwithstanding the Algerian Government’s ongoing measures against Orascom Telecom’s Algerian subsidiary, Orascom Telecom Algerie (“OTA”), OTA remains a strategically important asset for VimpelCom. VimpelCom is therefore interested in exploring with the Algerian Government a resolution which would allow VimpelCom to retain OTA following completion of the Transaction.
In the event that such a resolution is not possible within a reasonable time frame, VimpelCom has sought to lessen its financial exposure to the situation surrounding OTA by agreeing with Weather II an option, which can be exercised by VimpelCom at any time within six months from the closing of the Transaction, to enter into a value sharing arrangement with Weather II with respect to Orascom Telecom’s shareholding in OTA.
This value sharing arrangement provides for any financial losses or gains arising from the sale of all or part of OTA to the Algerian Government or from the eventual settlement of the disputes between OTA and the Algerian Government to be shared in certain pre-agreed proportions between VimpelCom and Weather II. This sharing arrangement would involve cash payments to/from VimpelCom and Weather II based on certain formulae linked to an agreed implied equity value of VimpelCom’s see-through ownership of OTA under various scenarios (Wind Telecom owns 51.7% of OTH which in turn owns 96.8% of OTA). In particular, the arrangement provides significant downside protection for VimpelCom in Algeria.
Financing
Following the 4 October 2010 announcement, VimpelCom and Wind Telecom launched the required financing processes. VimpelCom has obtained commitments of up to US$6.5 billion from Russian and international banks. Of this amount, VimpelCom expects to draw down approximately US$5.0 billion to finance the cash portion of the transaction consideration and to re-finance the Orascom Telecom debt which will be due upon acquisition by VimpelCom. Half will be raised in the form of a Russian rouble term loan and the balance via a US dollar bridge loan to be refinanced in the bond markets.
Wind Italy refinanced US$8.5 billion in November 2010 (fully ring-fenced from VimpelCom) and obtained necessary waivers from its high yield and PIK note holders.
The gross debt and net debt of the combined entity as the end of the third quarter of 2010 were US$24.8 billion and US$21.1 billion, respectively. The gross debt will increase to approximately US$25.7 billion post transaction and net debt to approximately US$21.7 billion. This increase is based on the impact of the Transaction consideration, the refinancing of Wind Italy, proceeds from the sale of the Tunisian operations of Orascom Telecom and various other costs. The net debt to EBITDA ratio on this basis would be 2.3x which is expected to be reduced in the two years thereafter to a level below 2.0x.
Orascom Telecom Spin-off and Wind Italy Spin-off
Wind Telecom’s interests in the assets to be demerged principally comprise Orascom Telecom’s investments in Egypt and North Korea and Wind Italy’s Wind International Services S.p.A. subsidiary, and certain other less significant assets. The assets owned directly by Wind Italy are contemplated to be transferred to the current Wind Telecom shareholders (“Wind Italy Spin-off”) on the closing date of the Transaction or immediately following the closing. The assets held through Orascom Telecom are contemplated to be transferred shortly after the closing date of the Transaction to the current Orascom Telecom shareholders (including Weather II) (“Orascom Telecom Spin-off”).
Both the Orascom Telecom Spin-off and the Wind Italy Spin-off are subject to a number of conditions precedent, including, in the case of the Orascom Telecom Spin-off, regulatory approval and approval at an Extraordinary General Meeting of Orascom Telecom shareholders. If the Orascom Telecom Spin-off is not completed, an additional amount of up to US$770 million in cash will be payable by VimpelCom to Wind Telecom shareholders and the Orascom Telecom Spin-off assets will remain within the combined group. If the Wind Italy Spin-off is not completed, an additional amount of US$100 million in cash will be payable by VimpelCom to Wind Telecom shareholders and the Wind Italy Spin-off assets will remain within the combined group.
Shareholder meeting and pre-emptive rights
The issuance of the VimpelCom common shares and convertible preferred shares in the Transaction requires the approval of a majority of shareholder votes present at the forthcoming Special General Meeting of VimpelCom shareholders (the “VimpelCom SGM”). We understand that Telenor remains opposed to the Transaction.
On January 10, 2011, Altimo informed VimpelCom that one of its affiliates owns shares in Orascom Telecom with a market value of approximately US$27.7 million and therefore, in their view, the Transaction should be treated as a “Related M&A Transaction” under the terms of the existing Shareholders Agreement among Altimo, Telenor and the Company.
The Company has also received letters from Telenor wherein Telenor asserts that it is entitled to pre-emptive rights under the Shareholders Agreement in connection with the issuance of new shares to the Wind Telecom shareholders. Telenor alleges that Altimo’s actions in this regard are a breach of the clause in the Shareholders Agreement requires the parties to act in good faith and in a constructive manner such as to give effect to the provisions of the Shareholders Agreement. Telenor’s letters further assert that the Company will be actively participating in Altimo’s efforts to prevent Telenor from exercising its pre-emptive rights if the Company takes the position that no pre-emptive rights apply to the Transaction. Telenor has stated that it will pursue all available remedies against the Company, Altimo and Wind Telecom shareholders in the event any shares are issued to the Wind Telecom shareholders without giving effect to Telenor’s claimed pre-emptive rights.
After considering the information received from Altimo and Telenor and after taking into account legal advice given to the Company and to its independent directors, the Supervisory Board of VimpelCom concluded that the Transaction should be regarded as a Related M&A Transaction. As a Related M&A Transaction, the Transaction will not be subject to any pre-emptive rights for either Altimo or Telenor under the Shareholders Agreement upon the issuance of the new shares to the Wind Telecom shareholders.
Shareholders Agreement
Under the revised terms of the Transaction, the existing Shareholders Agreement among Altimo, Telenor and the Company will not be amended. The Shareholders Agreement will remain in effect following the Transaction, provided that neither Altimo nor Telenor fall below a 25% voting stake in the Company as a result of a transfer of any of their respective shares. Under the Shareholders Agreement, Telenor and Altimo will continue to have the right to designate three board members each and three board members will continue to be unaffiliated with either Altimo or Telenor.
Estimated timetable
The conditions precedent to closing of the Transaction include, among others, receipt of consents required under competition or anti-trust laws in certain jurisdictions, VimpelCom shareholder approval for the issuance of new VimpelCom common and convertible preferred shares in connection with the Transaction and completion of actions and transactions required to be completed before closing pursuant to the refinancing plan for the Transaction.
The VimpelCom SGM to authorize the issuance of new common and convertible preferred shares is scheduled to take place on March 17, 2011. The Transaction is expected to close during the first half of 2011 following receipt of regulatory approvals. Each of VimpelCom and Wind Telecom has the right to terminate the Transaction at any time prior to receipt of shareholder approval at the VimpelCom SGM for the issuance of the new shares to the Wind Telecom shareholders pursuant to the Transaction.
Advisors
VimpelCom has engaged UBS Investment Bank and Deutsche Bank AG to act as its financial advisors and Akin Gump Strauss Hauer & Feld LLP to act as its legal advisor.
Citigroup Global Markets Limited acted as financial advisor to the Supervisory Board of VimpelCom.
UBS Investment Bank, Deutsche Bank AG and Citigroup Global Markets Limited each provided a fairness opinion to the Supervisory Board of VimpelCom.
NSN acquires IRIS Telecom
Nokia Siemens Networks has announced that it has wrapped the acquisition of IRIS Telecom, a telecommunications and engineering services firm. Financial terms of the agreement were not disclosed.
Istanbul, Turkey-based IRIS Telecom was founded in 1999 in order to provide network planning and optimization services to telecommunications operators and equipment vendors in Turkey, Eastern Europe and Central Asia, the Middle East and Africa. According to company’s website, IRIS Telecom also provides network deployment and network operation services. Its customers include mobile operators Turkcell, Avea and Ucell.
In a news release, Finland-based Nokia Siemens Networks stated that the acquisition strengthens its implementation, network planning and optimization capabilities and business across Turkey, Eastern Europe and Central Asia.
IRIS will continue to function as a separate legal entity and will remain based in Istanbul. Mete Gokdemir, the co-founder of IRIS, will continue to lead the company as chief executive. IRIS co-founder Johan Bruce will assume a new position as executive director. Gokdemir and Bruce will both continue to serve on IRIS’ board of directors.
Poland’s Mobile Market expects growth with new MNOs
According to a new report from Pyramid Research, LTE is expected to gain 11% of total subscriptions in 2015, while 3G will make up 69% of subscriptions in 2015, boosted by mobile player investment into HSPA+ networks.
Pyramid expects that the Polish market to grow at a CAGR of 1.7% in local currency terms in the forecast period, reaching US$14.7 billion by 2015, making it the second largest in Central and Eastern Europe, after Russia.
According to Sylwia Boguszewska, Analyst for Pyramid, this growth is driven by the proliferation of fixed broadband and related services, stemming from more intense competition, as well as mobile data, bundled with smartphones and computing devices.
As per Boguszewska, the Polish mobile market is almost evenly divided between the three largest MNOs – PTC, Orange, and Polkomtel. In 2009, two MNOs owned by Aero 2, CenterNet, and Mobyland entered the market. In September 2010, these latest entrants announced the launch of a LTE network, which is set to have a commercial debut towards year-end 2010. Aero 2 is also in possession of a LTE license, and a tender for more LTE spectrum is set to take place in 2011.
Pyramid expects that the mobile arm of the incumbent (Orange) will recover its leadership position. The other operators (Aero 2, Mobyland, and CenterNet) will hold a combined market share of 4% by the end of the forecast period, their competitive advantage being their first mover strategy in the LTE space.
Although CenterNet and Mobyland will provide wholesale services, there are already several players, including the leading DTH operator Cyfrowy Polsat, that are interested in reselling 4G Internet services.
Nokia Siemens Networks to Acquire IRIS Telecom
Nokia Siemens Networks is buying Turkey based IRIS Telecom, for an undisclosed sum to boost its network planning and optimization business across the region. According to the company, subject to regulatory approval, the deal should be completed during the first quarter 2011.
According to Nokia Siemens, IRIS, which has around 630 employees, will continue to operate independently under its own name, with its head office in Istanbul.
According to Mete Gokdemir, CEO, IRIS Telecom, 3G and mobile broadband are driving the need to manage end-user experience while improving network efficiency. While a fair portion of the region’s operators are still managing their networks in-house, the company is seeing a growing trend toward outsourcing, given the higher complexities and competence requirements of managing IP networks. In this evolving scenario, Nokia Siemens Networks’ proven business model and the acquired local capabilities of IRIS Telecom will create a winning proposition for operators.
According to Geert Buijk, regional head of Services, Nokia Siemens Networks, the company will use IRIS Telecom’s localized operations and strong position in NPO to improve the service delivery model in Turkey, Eastern Europe and Central Asia. The company aims to deliver unmatched competitive advantages for customers across a region where network data traffic is increasing rapidly as 3G and mobile broadband are starting to take off.
The current CEO, Mete Gokdemir will continue in his role, and Johan Bruce, currently chairman of IRIS Telecom’s Board, will be nominated Executive Director of the company. After closing of the deal, Nokia Siemens Networks will honor all existing commitments made by IRIS Telecom, including those to other equipment vendors. Future multi-vendor services opportunities will be evaluated on a case by case basis in line with Nokia Siemens Networks’ strategy.
MTS to launch its services in Grozny
Mobile TeleSystems (MTS) has expanded its services to the capital of the Chechen Republic, Grozny, where it will be providing complete 2G coverage with limited 3G coverage in the city’s main business region.
Mobile TeleSystems is the leading telecommunications group in Russia, Eastern Europe and Central Asia, offering mobile and fixed voice, broadband, pay TV as well as content and entertainment services in one of the world’s fastest growing regions. Including its subsidiaries, the Group serviced over 102.4 million mobile subscribers in Russia, Ukraine, Uzbekistan, Turkmenistan, Armenia and Belarus, a region that boasts a total population of more than 230 million.
Telekom Austria Q1 profit rises 6.9%
www.WirelessFederation.com/news: 6.9% rise in first-quarter net profit has been reported by Telekom Austria as strict cost control and lower amortisation, depreciation and interest payments more than offset lower sales. Earnings of the company also fell 6.4% in the quarter, comfortably overshooting expectations.
The first-quarter net profit rose to EUR91.2 million (USD115.9 million), from EUR85.3 million a year earlier, EBITDA fell to EUR425.9 million, from EUR454.8 million a year earlier and sales fell 5.9% to EUR1.13 billion from EUR1.2 billion.
According to the company, the drop in sales could be ascribed mainly to lower prices, regulation of roaming and mobile termination rates and a decline in fixed line customers, but that it was compensated to a large extent by mobile customer growth and cost reductions evenly distributed across the group. As the growth in subscribers failed to offset tougher regulation and currency losses in Eastern Europe, Telekom Austria’s mobile division saw sales decline 7.1%, to EUR734.2 million.
Deutsche Telecom puts big acquisitions on backburner
www.WirelessFederation.com/news: The fresh wave of financial problems in Europe has made Deutsche Telecom to put all its major future acquisitions on the backburner. The operator has shifted its focus towards building up cash reserves to guard against a second economic crisis.
The company believes that due to Germany’s national debt, it may have to face another crisis and so the company will avoid any big acquisitions in the near future.
According to company CEO Rene Obermann, Deutsche Telekom remained committed to Greek carrier Hellenic Telecommunications, even though the International Monetary Fund has had to prop up the country’s economy and added that the carrier was an important gateway into other central and eastern European countries, and that it is an important long-term play for Deutsche Telekom.
