Telenor increases stake in VimpelCom (Europe)
Telecom operator Telenor has increased its stake in Russian operator VimpelCom to 35.7 percent from 31.7 percent, in an attempt to increase its presence in the Russian mobile market.
According to a report by Nasdaq, VimpelCom’s share price has come under pressure of late as the result of a drawn-out negotiation process over its merger with Egyptian Orascom Telecom and the Algerian government.
The report reveals that while uncertainty over VimpelCom’s North African ventures may pressure the stock in the short-term, investors with a longer time horizon could follow Telenor’s lead and take advantage of the attractive entry point.
Like other emerging market telecom firms, VimpelCom will continue to benefit from the increased penetration of smart devices and a concomitant rise in lucrative mobile data revenue. Given the positive macro trends in the sector, combined with a projected annual growth rate of 26 percent and a strong free cash flow position, VimpelCom could be a good buy at these levels.
Armenia approves VimpelCom’s takeover of telecoms co. Armentel
Armenian authorities have approved the sale of a 90% stake in telephone company Armentel, held by a Greek firm, to Russia’s VimpelCom [RTS: VIMP] for $438.9 million, the state commission for public services regulation said Tuesday.
As well as buying the stake from Greek telecoms group Hellenic Telecommunications Organization SA (OTE), Russia’s second largest mobile operator, best known for its Beeline brand, will take on Armentel’s debt totaling around 40 million euros ($51 million).
VimpelCom, controlled by Russia’s Alfa Group and Norway’s Telenor, beat Russian mobile market leader MTS [RTS: MTSS] at the tender for the Armentel stake, which will give it 40% of the Armenian mobile telecommunications market. The takeover will be completed by the end of 2006, VimpelCom said.
The Armenian government ceded its right to purchase the stake from OTE on November 9.
Before receiving the authorities’ approval, VimpelCom and OTE had closed the deal, worth 341.9 million euros ($438.9 million).
Armenian Communications Minister Andranik Manukyan earlier said the government will sell VimpelCom the remaining 10% stake, on the condition that the company does not attempt to monopolize the South Caucasus country’s telecoms market.
Greece’s OTE bought Armentel in 1997 for $142.5 million, and has since invested $300 million in the company, whose earnings in 2005 stood at 110 million euros ($140 million).
Armentel has about 600,000 fixed-line and 400,000 mobile service subscribers, and uses the GSM 900 and CDMA standards.
As well as Russia, VimpelCom operates in the former Soviet republics of Kazakhstan, Georgia, Tajikistan, Ukraine, and Uzbekistan.
