In an interview with Global Telecoms Business, Jo Lunder, CEO of telecoms giant Vimpelcom Group, has reiterated previous claims that the company intends to deliver on its promise of generating USD2.5 billion worth of post-merger synergies in 2012. However, rather than eliminating existing vendors, the company intends to negotiate lower prices with its current suppliers. With reference to April 2011’s high profile USD6.5 billion takeover deal – which saw Vimpelcom merge with the various telecoms assets of Egyptian billionaire Naguib Sawiris – Lunder describes the central procurement aspect of the partnership as ‘the biggest advantage of a cross-border merger like this’.
Although the CEO readily admits that the enlarged company’s Russian and Italian units are ‘the two big elephants’, accounting for around 70% of the group’s business, he highlights Vimpelcom’s so-called ‘second tier’ units (Ukraine’s Kyivstar, Djezzy in Algeria, Banglalink in Bangladesh, Pakistan’s Mobilink and the assorted ‘Beeline’-branded cellcos across the CIS) as offering ‘huge potential’: ‘There are good cash-generative opportunities. We are at an early stage of data growth’. By contrast, Lunder classifies the remainder of Vimpelcom’s subsidiaries as ‘smaller operations with big potential’, cautioning that they ‘need time’. He went on to say: ‘It is a quite unique combination. [Russia and Italy] are cash machines to maintain our dividend level to shareholders and to help the growth engines. I like balance’.
However, contrary to widespread rumours, there are currently no plans to rebrand the recent batch of acquisitions in line with Vimpelcom’s existing Beeline units. ‘To me, even though the telecoms industry is global, the competition is local. Brand loyalty is irrelevant when you leave the country. There is more to gain from the local market by keeping a brand. Don’t take the risk of rebranding. I have a fond belief in businesses being local and brand loyalty being local. That’s where we are today. But, five years from now we will have to judge’.
Vimpelcom is a US-listed company, registered as Vimpelcom Ltd, incorporated in Bermuda and headquartered in the Netherlands. Its controlling shares are split between Telenor of Norway, Russia’s Altimo and Wind Telecom (formerly Weather Investments, the holding company owned by Naguib Sawiris).