Sawiris and VimpelCom close to US$7 billion deal

Russian mobile phone operator VimpelCom is reported to be nearing a US$7 billion deal to merge with most of the telecom assets of Egyptian telecom entrepreneur Naguib Sawiris.

Despite previous denials by Sawiris that such a development was under foot, VimpelCom, whose current market value is US$19 billion, looks poised to acquire most of Sawiris’ telecom assets in emerging markets as well as Italian mobile operator Wind.

Sawiris’ private investment vehicle that controls Wind and the Cairo-listed Orascom Telecom group, Weather Investments, will receive US$2 billion in cash under the deal and a 20 per cent stake in VimpelCom.

The transaction, under which VimpelCom could assume at least US$12 billion of debt held by Weather, will exclude Orascom’s 29 per cent stake in a holding company that controls Egyptian mobile operator, ECMS, and Sawiris’ mobile business in North Korea. France Telecom is the other major shareholder in ECMS.

VimpelCom is 39.6 per cent-owned by Norwegian operator Telenor, while Alfa’s Altimo unit holds 39.2 per cent and minority shareholders own 21.2 per cent. Their stakes will be diluted under the agreement with Sawiris.