Russia's Vimpel Communications bought a
49.9% stake in Morefront Holdings Ltd., a company that owns 100% of the Euroset Group, for $226 million. Euroset is the largest mobile handset retailer and leading dealer for major mobile network operators in Russia. VimpelCom CEO Alexander Izosimov (pictured) gave this rationale for the deal: "Historical analysis across multiple markets shows that the level of importance of retail networks rises during challenging market conditions. Hence, it is in our best interest to forge solid relationships with the retail operators at this point in time." VimpelCom is Russia's second-biggest mobile telecoms carrier.
Reuters, quoting local newspaper Vedemosti, says Vimpelcom will pay $580 million in total for the stake and to refinance Euroset's debt. Another report says
Vimpelcom signed a new unsecured $760 million loan last week to help fund the expansion and development of its networks, including possible overseas acquisitions. Izosimov added, "Clearly, the financial crisis does require from every company a very careful approach to managing its financial exposure and this deal has been completed after very intense and careful analysis." He says the deal will not jeopardize the financial viability of VimpelCom. As part of the deal, VimpelCom has agreed on put and call arrangements allowing it to buy another 25% stake in Euroset within 3 years.
VimpelCom has been a busy delamker this year. PR-Inside.com notes that it completed the $4.7 billion acquisition of Golden Telecom, a Russia and Ukraine-centric broadband operator with a growing presence in other CIS states. And in June, it
directed Golden Telecom to acquire the outstanding shares of its affiliate, Corbina Telecom, an independent fixed-line operator with a growing presence in Russia's broadband market. Later, VimpelCom increased its stake in Kar-Tel, the second-largest cellular operator in Kazakhstan, to 75% for $561.8 million. In July, it spent $267 million for a 40% stake in a mobile-communications joint venture with Global Telecommunications Corp., a Vietnamese state-owned firm.
The International Telecommunication Union announced that
global mobile subscribers are expected to reach 4 billion before the end of the year, with BRIC accounting for 1.3 billion of them. -
Baz Hiralal
See the deal announcementAlso: Read more on telecom deals from around the globe
Join Corporate Dealmaker's LinkedIn forum
Juergen Lasowski
And the winners are...
