Shareholders in Russian operator VimpelCom have voted in favour of a $6bn merger with Wind Telecom. Despite strong opposition from major shareholder Telenor, more than 53 per cent of voters supported a deal that will see the creation of the world’s fifth largest mobile company by subscriber base.
Under the deal, the telecom assets of Egyptian billionaire Naguib Sawiris have been acquired, bringing with them a series of challenges, not least in Algeria, where the possiblity of nationalising Sawiris’ assets (including Orascom) will almost certainly bring about lengthy negotiations. Other speedbumps include the integration of holdings in 15 emerging markets as well as Canada and Italy, an ongoing legal battle with Telenor and a need to reduce debts.
The merger decision comes on the back of months of legal wrangling with Norway’s Telenor which, despite its 36 per cent stake in VimpelCom, was unable to exert influence over the minority shareholders, the majority of whom supported 44.6 per cent stakeholder Alfa Group’s (Altimo) favouring of the deal. According to VimpelCom, the transaction will be completed by the first half of this year. Despite losing the battle, Telenor spokesman Dag Melgaard said on Thursday that it remained committed to its investment in VimpelCom, “even though we believe [it] would have been better off without this deal.” Previously, Telenor had stated its belief that neither the original merger proposal nor a revised one made financial or strategic sense and that the terms were overly generous to the owners of Wind.
Through the deal, VimpelCom will own, through Wind Telecom, 51.7 per cent of Orascom Telecom and 100 per cent of Wind Italy. The enlarged company will operate in 19 countries with more than 173 million mobile subscribers.
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