Chillin' out till it needs to be funded
Setting the tone for 2011 was the Telecom deals market with Russian operator Vimpelcom buying into African telecom assets though again MTN fell along he way and could not commit to a deal. May be 2011 will see MTN come out of South Africa and use its cash for purchases in other Asian Markets
Once again the deal sees high amounts of debt exchanging ownership with the asset purchase. IFRS conditions on disclosures are more stringent and off balance sheet options are closed to even infrastructure and capital intensive sectors which have historically found off balance sheet debt attractive. As highlighted by MTN, national pride also seems to be a constant dealbreaker.
Russia’s second largest mobile phone operator, is close to finalising a $7bn deal to combine with most of the telecoms assets of Naguib Sawiris, the Egyptian telecoms entrepreneur.
Under the deal, which could be announced as soon as Monday, VimpelCom would secure most of Mr Sawiris’ telecoms assets in emerging markets, plus Wind, Italy’s third largest mobile operator. The enlarged VimpelCom group would be the fifth largest mobile operator in the world by number of customers with a market cap of $24 bn..
Weather Investments, Mr Sawiris’ private investment vehicle that controls Wind and the Cairo-listed Orascom Telecom group, could receive about $2bn in cash under the deal, plus a 20 per cent stake in VimpelCom, worth $4.8bn.
VimpelCom’s board was due to meet on Sunday evening to approve the deal with Weather, and people familiar with the situation said the transaction could yet founder because of its complexity. Two said VimpelCom could additionally take on $12n of Weather debt
Mr Sawiris’ VimpelCom transaction is due to include Djezzy, Orascom’s biggest profit generator, and Dmitry Medvedev, Russia’s president, is expected to visit Algeria this week – a move that may help seal the deal.
One asset that Mr Sawiris would exclude from the VimpelCom transaction is Orascom’s 29 per cent stake in a holding company that controls ECMS, Egypt’s leading mobile operator.
Another asset outside the transaction would be Mr Sawiris’ mobile business in North Korea.