Telecom & Wireless

Daily M&A: The VimpelCom Surprise (VIP, MBT, VOD)

Russia is one of the great new investment frontiers which offers high rewards in a high risk-reward game.  When VimpelCom Ltd. (NYSE: VIP) announced that it was acquiring Wind Telecom S.p.A. in Egypt, some shareholders were scratching their heads.  The move took VimpelCom from being mostly a Russian (and neighboring nations) into a much larger footprint as it was entering Egypt.  The timing perhaps hurt the company considering the strife in North Africa and the Middle East.  All the caveats aside, VimpelCom shareholders have now approved the merger with Wind.

This now adds Egypt and more countries into VimpelCom’s markets of Russia, Ukraine, Kazakhstan, Uzbekistan, Tajikstan, Georgia, Armenia, Kyrgyzstan, Vietnam, Cambodia and Laos.  The company now will be more of a global telecom player with over 173 million mobile subscribers out of a target market total population of about 838 million people.  The combined company is also said to have what could be $2.5 billion in synergies on a net present value basis.

WIND TELECOM S.p.A. owns 100% of Wind Telecomunicazioni S.p.A. and 51.7% of Orascom Telecom Holding SAE, which in turn operates GSM networks in Algeria, Bangladesh, Egypt, Pakistan, North Korea, and in Canada through its indirect equity ownership in Globalive Wireless.

VimpelCom used to be considered more or less like Mobile Telesystems OJSC (NYSE: MBT) but now it may be considered more and more like a mini-version of Vodafone Group plc (NYSE: VOD).

VimpelCom shares are at $13.86 and its 52-week trading range is $12.32 to $18.97.

JON C. OGG