Vimpelcom receives shareholder, regulatory approval for Wind Telecom merger

18 Mar 2011

Russian telco Vimpelcom has announced that its shareholders approved ‘all of the items on the agenda’ at yesterday’s Special General Meeting (SGM), paving the way for the company to complete its proposed merger with Wind Telecom (formerly Weather Investments), the telecoms holding company owned by Egyptian billionaire Naguib Sawiris. Shareholders representing 93.1% of the company’s voting shares participated in the SGM, with 53.3% giving their approval of the long-running transaction. TeleGeography notes that following a share offer on 20 April 2010 Altimo’s voting stake in Vimpelcom has stood at 44.65% (39.19% equity stake), while Norwegian co-owner Telenor has had 36.03% voting rights (39.58% equity) with a free float of 19.32% voting shares (21.23%). Altimo is the telecoms investment arm of Russian conglomerate Alfa Group. Prior to the SGM Telenor had consistently raised objections to the transaction, believing that it ‘did not make strategic or financial sense for Vimpelcom’s shareholders’. Of the company’s public shareholders present at the SGM, 39.8% voted in favour, with 60.2% voting against, but the majority was not sufficient to influence the overall vote.

In a related development, Vimpelcom has also confirmed that it has received all of the necessary regulatory approvals needed to complete the combination of Vimpelcom and Wind Telecom. Final approvals have now been received from the Italian Antitrust Authority, the Antimonopoly Committee of Ukraine, the Competition Commission of Pakistan and the Pakistan Telecommunications Authority. Vimpelcom notes that the completion of the transaction remains subject to certain other conditions, chiefly the receipt of the required funds to finance the deal. Vimpelcom has stated that it can now ‘proceed without delay’, with the merger expected to occur in 1H11.

Following the completion of the transaction, Vimpelcom will own, through Wind Telecom, 51.7% of Egypt-based international cellular group Orascom Telecom [minus certain assets including Egyptian and North Korean mobile businesses] and 100% of Italian full-service telco Wind Telecomunicazioni. Orascom is present in markets including Pakistan, Algeria, Tunisia, Bangladesh, Zimbabwe, Namibia, Burundi and Canada, while Vimpelcom operates in Russia, Ukraine, six other CIS countries, Vietnam and Cambodia. The combination of the assets of Vimpelcom and Wind Telecom – as previously announced on 4 October 2010 – will create the world’s sixth largest mobile telecoms carrier by subscribers. Alexander Izosimov, CEO and President of Vimpelcom, commented: ‘The approval of this transformative combination with Wind Telecom by our shareholders will lead to the creation of a new global telecom player with over 173 million mobile subscribers covering a population of 838 million people. The combined group will have a significantly diversified revenue base, substantially larger scale of operations, and potential synergies estimated to be USD2.5 billion on a net present value basis. This transaction and the shareholder vote underscore the company’s dedication to delivering substantial value creation for shareholders and our commitment to corporate governance excellence’.