Vimpelcom CEO predicts Wind Telecom deal ‘will die’ after Telenor starts arbitration

4 Feb 2011

In an interview with Bloomberg Television, Vimpelcom CEO Alexander Izosimov has warned that his company’s plan to buy Wind Telecom, the telecoms holding company formerly known as Weather Investments, is likely to collapse should the arbitration deal sought by fellow shareholder Telenor proceed. Izosimov commented: ‘If arbitration kicks in, that process can last for years. If you go into that, the deal will die’. As previously reported by TeleGeography’s CommsUpdate, in January Vimpelcom confirmed that its supervisory board had given its final approval for the proposed merger with the telecoms assets belonging to Egyptian billionaire Naguib Sawiris. Six of nine directors, including all three independent directors and the three Altimo-nominated directors, voted in favour of the transaction, with the three Telenor-nominated directors voting against the transaction. This week Telenor confirmed that it had launched arbitration proceedings against its Russian partners, in relation to the Vimpelcom Shareholders Agreement.

However, Izosimov conceded that the political upheaval currently unfolding in Egypt – where Sawiris is based – has not dimmed the lustre of the transaction, even if the turmoil has given him ‘a certain uneasy feeling about the region’. The CEO declared: ‘The nature of the business is to stay out of politics. It’s not the first crisis we see in our markets and, at the end of the day, people will continue to talk and use our services. Therefore, when we enter a country, we’re there for the long run, and we’re going to stay, and I think that’s what Naguib [Sawaris] thinks as well’.

In a separate interview, with Norwegian daily Dagens Naeringsliv, Izosimov bemoaned Telenor’s present position, cautioning: ‘Patience is starting to end. I was hired as Vimpelcom’s top boss with a mandate to grow the company further through mergers and acquisitions, and there are few M&A opportunities in a market of this calibre. What is Telenor going to use its [pre-emptive] rights for? I do not understand why Telenor will throw good money after bad if they believe that the acquisition is such a bad idea’.

Russia, Beeline (Russia), Telenor Group, VEON