VimpelCom, one of Russia's three biggest mobile operators, hopes it will solve the ownership issue surrounding part of Egypt's Orascom Telecom, which VimpelCom acquired in a $6.6 billion merger agreement, VimpelCom Chief Executive Officer Alexander Izosimov said late on Tuesday.
In a deal that will make it the world's fifth largest mobile operator, VimpelCom signed a merger contract with Weather Investments S.p.A, under which the Russian firm will get 51.7 percent of Orascom Telecom, an operator in Africa, Asia and Canada, and 100 percent of Wind Telecomunicazioni S.p.A., an Italian provider.
But Algeria plans to privatize Djezzy, part of Orascom, and also claims that it has tax arrears.
Izosimov told a conference call that President Dmitry Medvedev might discuss the problem during his forthcoming visit to Algiers.
"We will be trying to settle the question. We believe that Algerian problems are reasonably likely to be solved. I cannot say that there is a 100 percent probability, but it is very high," Izosimov said.
"I can not comment on the questions which the president will discuss. However, given the fact that this is one of the largest investments of a Russian company in the Algerian economy, we can suppose that the issue will be discussed while speaking about business contacts."
He did not rule out that VimpelCom would sell Djezzy to Algeria if a good price was offered but added that the company would like to keep the asset.
Izosimov also said that Djezzy is an "interesting and attractive asset", adding that it accounts for 10 percent of the deal and "is not a critical asset".
VTB Capital claims the Djezzy problem marred the whole merger deal.
"The premium in the deal is not significant (5-8 per cent depending on different calculations methods), but VimpelCom Ltd. would actually get a 51.7 percent exposure to the potential loss of Djezzy, with only possibly poor compensation from the Algerian government," VTB Capital said.
"And according to management, were that to happen, VimpelCom Ltd. would not have the opportunity to reverse the deal. And while there is still a chance that the visit of President Dmitry Medvedev to Algeria ... might alter the situation, we think that such a risk demands a discount (rather than actual premium) for OTH in the deal."
Izosimov said that VimpelCom might sell some of other assets received under the deal with Weather, while some VimpelCom's assets in Southwestern Asia could be transferred to Orascom.
Izosimov also said that he was interested in increasing VimpelCom's stake in Canadian subsidiary of Orascom.
MOSCOW, October 5 (RIA Novosti)
Add to blog
You may place this material on your blog by copying the link.
Image Galleries: This Week in Pictures
Infographics: Nobel Peace Prize